Stocks dip in response to car makers' downgrade

EUROPE REPORT:Eurostoxx 50: 2,974.58 (–10.08) Frankfurt DAX: 7,204.86 (–12.16) Paris CAC: 4,038.70 (–23.21)

EUROPEAN STOCKS declined yesterday, dragging the Stoxx Europe 600 Index from a one-month high, as car makers and construction companies fell before the start of the US earnings-reporting season.

“There is a real battle taking place in investors’ minds at the moment,” said Henk Potts, a London-based equity strategist at Barclays Wealth in London, which oversees $239 billion. “There is the potential to be distracted by macro events whether natural disasters or political unrest against a still pretty bright corporate picture.”

An aftershock struck Japan about 60kms (37 miles) from Tokyo Electric Power’s stricken nuclear power plant, shaking buildings in the capital. The government said 220,000 households in northern Japan lost power after the temblor.

Daimler dropped 2.5 per cent to €50.75 in Frankfurt after Credit Suisse lowered its recommendation for the world’s largest maker of commercial vehicles and cut its share price estimate by 13 per cent to €65.

Hochtief tumbled 9.5 per cent to €62.25 after Germany’s largest publicly traded builder said pre-tax profit may fall about 50 per cent this year.

Schneider Electric declined 3.3 per cent to €117.45 after three people with knowledge of the matter said the company is weighing a takeover offer for Tyco International that would make the French company the world’s biggest maker of security systems.

Husqvarna sank 7.4 per cent to 50 kronor after the world’s largest maker of lawnmowers said first-quarter sales and operating profit in the Americas fell short of expectations.

Barclays gained 3.1 per cent to 306.3p and Royal Bank of Scotland increased 2.7 per cent to 44.58p as the ICB recommended the UK’s biggest banks should hold core Tier 1 capital levels of about 10 per cent, implement “credible” resolution plans and ring-fence consumer units.

BHP Billiton rallied 2.1 per cent to 2,639p after the company doused speculation it plans to buy Royal Dutch Shell’s stake in Woodside Petroleum.

Roth Rau soared 13 per cent to €22.28 after Meyer Burger Technology made a €357 million ($516 million) bid to combine their solar-equipment units. – (Bloomberg)