European Stocks Fall as Drop in Miners, Oil Shares Outweigh ECB

By Namitha Jagadeesh and Sofia Horta e Costa  

European stocks fell from a five-week high as energy and mining shares followed commodity prices lower on global-growth concern.
The Stoxx Europe 600 Index dropped 0.3 percent to 343.92 at 10:22 a.m. in London. The benchmark gauge pared losses of as much as 1.4 percent after an aide to the European Union’s top court said a bond-buying program by the region’s central bank via outright monetary transactions is “in principle” in line with the bloc’s treaty.
“The global economy is now terribly sensitive to small inputs in important factors, such as currencies, oil prices, and commodity prices,” David Hussey, head of European equities at Manulife Asset Management, said by phone from London. “People are going to be
very worried about whether we’re in deflation and whether growth is coming back. The market is extremely confused. That’s what this year is all about, and there will be a lot more volatility.”
Oil producers and basic-resources companies posted the biggest losses among all 19 industry groups as Brent prices slid for a fifth day, while copper tumbled to a 5 1/2-year low. Rio Tinto Group and BHP Billiton Ltd., the world’s largest mining companies, fell at least 4 percent while Antofagasta Plc slumped 7.7 percent. Total SA, BP Plc and Royal Dutch Shell Plc slipped more than 1 percent.

Global Growth

The World Bank cut its forecast for global growth this year amid worsening prospects in Europe and China, the world’s biggest consumer of copper. The metal’s price tumbled as much as 8.7 percent, the most since July 2009, before paring some losses. Nickel declined to an 11-month low.
The VStoxx Index, a gauge of volatility on the Euro Stoxx 50 Index, rose 0.4 percent to 28.66 today. It pared gains of as much as 5.5 percent after the EU Court of Justice’s Advocate General Pedro Cruz Villalon said in a non-binding opinion the ECB must have a “broad discretion” in framing and implementing monetary policy. The central bank meets Jan. 22 to consider buying sovereign bonds to combat the threat of deflation.
The Stoxx 600 yesterday rose to its highest level since Dec. 8 as retailers climbed and data showed U.K. inflation fell to its lowest level in 15 years, strengthening the case for the Bank of England to delay raising interest rates. The gauge is still 2 percent below an almost seven-year high reached Dec. 5.
Among stocks bucking the trend on corporate news today, Jeronimo Martins SGPS SA rallied 10 percent after the grocer said fourth quarter comparable sales grew in Portugal and Poland. AstraZeneca Plc rose 1.5 percent after saying its anti-clotting pill Brilinta benefits patients more than a year after they’ve had a heart attack, extending its revenue potential. Carlsberg A/S (CARLB) rose 1.8 percent after Barclays Plc upgraded its recommendation on the stock.