European stocks dropped, erasing their fifth weekly gain, as investors awaited a report on American jobs amid concern stronger economic data will spur the Federal Reserve to reduce bond purchases sooner than forecast. U.S. index futures rose, while Asian shares fell.
Total SA lost 1.4 percent, contributing the most to the benchmark gauge’s decline, after an investor sold shares in Europe’s second-largest oil producer. Finmeccanica SpA slumped 6.1 percent after saying it will miss its 2013 profit target. International Consolidated Airlines Group SA jumped to the highest price in almost six years after raising its outlook.
The Stoxx Europe 600 Index slipped 0.7 percent to 320.94 at 11:26 a.m. in London. The measure erased its weekly advance as an unexpected interest-rate cut by the European Central Bank pointed to a weak regional economy, outweighing better-than-forecast company results. S&P 500 Index futures added 0.2 percent today. The MSCI Asia Pacific Index slid 0.4 percent.
“The combination of yesterday’s stronger-than-expected GDP data with a potentially improving payrolls report would shift the market’s focus back to Fed tapering sooner rather than later, which could create uncertainty at the end of the year,” said Mark Andersen, who helps oversee $1.7 trillion as head of asset allocation at UBS AG in Zurich. “The aftermath of yesterday’s weaker trading is still being felt in European markets today.”
A U.S. Commerce Department report yesterday showed that the world’s largest economy grew at a better-than-estimated 2.8 percent annual rate in the third quarter. A release at 8:30 a.m. Washington time today may show that American employers added fewer workers in October and the jobless rate rose for the first time in five months.
Payrolls increased by 120,000 last month following a 148,000 gain in September, according to the median forecast in a Bloomberg News survey. The unemployment rate climbed to 7.3 percent from 7.2 percent, economists projected.
A Bloomberg News survey last month had showed economists expected quantitative easing to continue for several months. The Fed won’t begin tapering bond buying until March and will continue its purchases until October, according to the median estimate of 40 analysts in that poll.
In Europe, Exane BNP Paribas SA downgraded the region’s equities to neutral from overweight. Stock valuations have become a constraint for investment, given risks to economic growth and a potential tapering of Fed stimulus, the brokerage said. The Stoxx 600 traded at 15 times the projected earnings of its constituents on Nov. 6, the highest level since early 2009.
France’s long-term foreign and local-currency credit rating was lowered one step to AA from AA+ by Standard & Poor’s, which said slower growth will restrict the government’s ability to improve public finances. The outlook for the rating is stable, the ratings company said.
The yield on France’s 2.25 percent bond due in May 2024 increased two basis points to 2.39 percent. Since S&P’s first downgrade on Jan. 13, 2012, French government bonds returned more than 10 percent, according to the Bloomberg France Sovereign Bond Index.
Total fell 1.4 percent to 43.70 euros. Groupe Bruxelles Lambert SA is selling a 0.3 percent stake in the company for about 360 million euros ($483 million), according to terms of the deal.
Finmeccanica SpA slumped 6.1 percent to 5.10 euros, for its biggest decrease since April. The company said it won’t meet its 2013 target for earnings before interest, taxes and amortization. Profit will be 5 percent to 10 percent lower than its 1 billion-euro goal, the company said.
Cie. Financiere Richemont SA retreated 1.8 percent to 91.35 Swiss francs after posting first-half operating profit that missed analysts’ estimates. The owner of the Cartier brand said operating profit dropped to 1.37 billion euros in the six months through September. Analysts in a Bloomberg survey forecast 1.4 billion euros.
Telecom Italia SpA (TIT) retreated 5.6 percent to 68 euro cents after unveiling plans to sell its Argentine business and assets including wireless towers in Italy and Brazil. The phone company also completed a sale of mandatory convertible bonds.
IAG gained 4.6 percent to 365.1 pence after saying third-quarter earnings more than doubled and raising its full-year outlook. The parent of British Airways posted operating profit of 690 million euros before one-time items, beating the 651 million-euro average estimate of four analysts.
Rolls-Royce Holdings Plc rose 2.7 percent to 1,202 pence. The world’s second-largest maker of commercial jet engines raised the earnings target for its defense aerospace unit after booking more contracts from the U.S. government.
Allianz SE climbed 1.2 percent to 124.45 euros. Quarterly net income increased to 1.45 billion euros, beating the 1.37 billion-euro average analyst forecast. Europe’s biggest insurer raised its target for operating profit this year to “slightly above” 9.7 billion euros from a previous range of 8.7 billion euros to 9.7 billion euros.