European Stocks Retreat as Investors Await ECB Decision

By Inyoung Hwang  

European stocks fell for the third time in four days, as investors awaited the European Central Bank’s monetary policy decision and any hints on further stimulus from President Mario Draghi. U.S. index futures and Asian shares also declined.
Legrand SA lost 3.4 percent after saying 2014 sales and operating margin will be at the low end of its targets. Societe Generale SA slid 2.5 percent after France’s second-largest bank posted third-quarter earnings that missed analysts’ estimates. Adidas AG rose 4.4 percent after reporting quarterly profit that topped projections. HeidelbergCement AG gained 3.6 percent after saying third-quarter earnings increased.
The Stoxx Europe 600 Index slipped 0.5 percent to 334.6 at 9:09 a.m. in London. The benchmark gauge rose yesterday for the first time in three days as
companies from Marks & Spencer Group Plc to Natixis SA reported better-than-estimated earnings. Standard & Poor’s 500 Index futures lost 0.2 percent today, while the MSCI Asia Pacific Index fell 0.6 percent.

Europe’s QE Quandary

The ECB is expected to hold rates at record lows when it meets for the first time since the Bank of Japan boosted its unprecedented stimulus, a move that fueled gains in the nation’s equities. The Bank of England is also seen holding rates today.
The ECB will announce its decision at 1:45 p.m. in Frankfurt and Draghi will start his press conference 45 minutes later.
A flagging euro-area economy and increased monetary stimulus from the BOJ have put pressure on Europe’s policy makers to do more to support a recovery. More than half of the economists surveyed by Bloomberg News predict the ECB will eventually embark on large-scale sovereign-bond purchases.

Stimulus Measures

The central bank has already cut interest rates twice, offered cheap long-term loans to banks and embarked on covered-bond purchases to help spur growth in the region.
Draghi has repeatedly said policy makers are unanimous in their willingness to add stimulus if needed to prevent a deflationary spiral of falling prices and households postponing spending. Further options include purchases of corporate bonds or Japan-style buying of government debt.
Legrand tumbled 3.4 percent to 40.65 euros. The world’s largest maker of switches, plugs and lighting controls said targets set at the start of the year have become challenging, and it now sees results at the low end of its 2014 forecasts. The French company had said sales would be flat or grow as much as 3 percent on year, while pre-acquisition margins would be 19.8 percent to 20.2 percent.

Societe Generale

Societe Generale declined 2.5 percent to 37.04 euros. The Paris-based lender said third-quarter profit was 836 million euros ($1.05 billion), trailing the 872 million-euro average estimate of analysts.
Adecco SA dropped 1.3 percent to 63.65 Swiss francs. The supplier of temporary workers said revenue expansion slowed in the third-quarter versus the first half of the year because of weaker growth in France and Germany.
Zurich Insurance Group AG fell 2.3 percent to 287 francs. Switzerland’s biggest insurer said third-quarter profit dropped 16 percent to $928 million as income from general insurance declined. That missed the $1.04 billion average estimate of analysts surveyed by Bloomberg.
Adidas added 4.4 percent to 59.25 euros. The German sporting-goods maker said today that net income fell to 282 million euros. That beat the average 268.4 million-euro estimate of analysts surveyed by Bloomberg.
HeidelbergCement gained 3.6 percent to 56.71 euros. The world’s third-biggest cement maker said third-quarter earnings increased 9.8 percent as it raised prices in North America.