Europe Stocks Little Changed After Drop as Energy Shares Rebound

By Inyoung Hwang  

European stocks were little changed after a two-day decline as energy producers rebounded.
The Stoxx Europe 600 Index climbed less than 0.1 percent to 334.1 at 12 p.m. in London, with oil-and-gas companies up 0.2 percent. The broad equity measure fell as much as 0.9 percent after data showed a gauge of euro-area services and manufacturing fell short of a preliminary reading.
The Stoxx 600 lost 2.2 percent yesterday, closing down 4.8 percent from an almost seven-year high last month, amid a slump in energy shares and growing concern over Greece as Prime Minister Antonis Samaras said this month’s election could lead to the nation exiting the euro area. The Euro Stoxx 50 Index of the biggest companies in the region sank 3.7 percent, the most since November 2011. It rebounded 0.5 percent today.
“With the whole situation in Greece, markets are worried and then the falling oil price doesn’t help,” said Peter Braendle, who helps manage about
500 million euros ($596 million) of European equities at Swisscanto Asset Management in Zurich. “In the short term, the drop in oil is confusing many investors. People are wondering what’s the reason, what’s so wrong for the price to be falling by this much? Some people even fear deflation.”
The plunge in oil-and-gas companies, as well as Samaras’s failure to get enough backing for his presidential candidate, leading to early elections on Jan. 25, triggered the first December decline for the Stoxx 600 since 2008. That pared the index’s annual gain to 4.4 percent, the smallest since 1992.

Epiphany Holiday

Greece’s ASE Index lost 5.6 percent yesterday, dropping to its lowest level since November 2012. It is closed today for the Epiphany holiday, and so are markets in Austria, Sweden and Finland. Even so, the volume of Stoxx 600 shares changing hands today was 18 percent greater than the 30-day average, data compiled by Bloomberg show.
Benchmark equity gauges of Italy, Spain, France and Portugal all dropped more than 3 percent yesterday. The Italian FTSE MIB Index (FTSEMIB) rose 1.4 percent today, the most among 18 western-European gauges.
The moves have also pushed up a gauge of stock volatility. The VStoxx Index closed at its highest level since Oct. 16 yesterday. That day, it reached a two-year high. The VStoxx slipped 4.8 percent today.
A Purchasing Managers’ Index for euro-area services and manufacturing signaled economic growth slowed in the final quarter of 2014. The gauge rose to 51.4 in December from 51.1 in November, Markit Economics said today. While that’s above the 50 mark that divides expansion from contraction, the reading falls short of a preliminary reading of 51.7 published on Dec. 16. The data suggest the euro-area economy expanded 0.1 percent in the fourth quarter, London-based Markit said.

ECB Meeting

The data, plus weak inflation numbers and the decline in oil, support calls for more stimulus by the European Central Bank at the next meeting on Jan. 22. December consumer prices in Germany slowed to the lowest level in more than five years, and economists estimate euro-area data tomorrow will show a decline.
Energy companies in the Stoxx 600 added as much as 0.6 percent as a group after earlier sliding 1.8 percent. Total SA gained 1.2 percent and Eni SpA rose 1.6 percent.
Among companies moving on corporate news, TomTom NV jumped 9.3 percent after saying Volkswagen AG selected the Dutch company to use its navigation devices in several car models.