European Stocks Retreat Amid Greece Concerns as Lenders Decline

by Inyoung Hwang

(Bloomberg) -- A drop in banks led European stocks down, while concern grew over the political situation in Greece as Prime Minister Alexis Tsipras reaffirmed his rejection of the country’s international bailout program.
The Stoxx Europe 600 Index fell 1.2 percent to 368.79 at 9:31 a.m. in London, with lenders sliding 1.8 percent as a group. Greece’s ASE Index lost 4.6 percent, with Eurobank Ergasias SA and Piraeus Bank SA sliding more than 9.5 percent. Spanish and Italian stock indexes were among the biggest decliners after the Greek one.
“The word to describe the situation would be fear,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. Tsipras’s speech “raises concerns of tensions and fears for the worst for Greek banks and European banks,” he said.

Tsipras isn’t backing down from pledges that would breach conditions of the bailout aid. He vowed to increase the minimum wage, restore the income tax-free threshold and halt infrastructure privatizations. In his Sunday speech, he also said he would ask for World War II reparations from Germany and the repayment of forced loans Greece made to the Nazi regime during the
country’s occupation. Euro area’s finance ministers will hold an emergency meeting on Feb. 11 in Brussels.
Spain’s IBEX 35 Index and Italy’s FTSE MIB Index retreated 1.6 percent. Germany’s DAX Index lost 1.7 percent after a report showed the nation posted a record current-account surplus in 2014.

Renault, Volkswagen

The Stoxx 600 is falling for the first time in six days, with all its 19 industry groups down. Automakers dropped 2.4 percent as Renault SA, Volkswagen AG and Bayerische Motoren Werke AG fell more than 2.5 percent.
UBS Group AG lost 1.2 percent as people familiar with the matter said the U.S. Justice Department is looking into whether the Swiss bank misled clients in the marketing and selling of some foreign-exchange structured products. HSBC Holdings Plc fell 1.6 percent after a report by the International Consortium of Investigative Journalist showed its private-banking unit made profits for years handling secret accounts for criminals.
BNP Paribas SA declined 3.4 percent after JPMorgan Chase & Co. lowered the stock to a rating similar to sell, citing concerns that higher costs will hurt returns.
European shares are falling after the Stoxx 600 advanced 1.7 percent last week as the U.S. added more jobs in January than forecast and Greece retreated from a plan to ask the euro area to write down debt. The ASE rallied the most since November in the period.