Merck's poor sales weigh on European indices

Eurostoxx 50: 2,693.71 (–45.94) Frankfurt DAX: 7,240.10 (–109.35) Paris CAC: 3,734.07 (–53.81)EUROPEAN STOCKS fell for a third day yesterday, as earnings from Clariant to Merck missed estimates and US politicians wrangled over the nation's debt limit.

The Stoxx Europe 600 slid 1.1 per cent .

“The earnings season has revealed that weakness in the global economy remains,” Philippe Gijsels, the head of research at BNP Paribas Fortis Global Markets, said.

“There have been some misses in terms of guidance and this shows us we’re in a mid-cycle slowdown with companies being held hostage by economic conditions,” he said.

Moody’s Investors Service, Standard and Poor’s and Fitch Ratings have said they may cut the US’s top-level sovereign rating if officials fail to resolve the stalemate on the $14.3 trillion borrowing ceiling.

The government needs to boost the cap by August 2nd so it can keep paying its bills, according to the Treasury Department.

Clariant plunged 14 per cent to 13.19 Swiss francs, the largest drop since February 2003.

Merck unexpectedly reported a second-quarter loss and cut its forecast for full-year operating profit. The stock sank 4.7 per cent to €73.82.

Peugeot lost 7.5 per cent to €27.28 after Europe’s second-largest car maker abandoned a goal of increasing second-half earnings at the automotive division.

Bank stocks posted the third-largest decline among 19 industry groups on the Stoxx 600, after auto makers and insurers.

Santander retreated 3.3 per cent to €7.33 as second-quarter profit dropped 38 per cent after Spanish loan provisions surged and it set aside funds for customers mis-sold personal-loan insurance in the UK

UniCredit, Italy’s largest bank, fell 4.3 per cent to €1.22 and Intesa Sanpaolo lost 5.1 per cent to €1.57. Lloyds Banking slid 4 per cent to 43.38p.

Italian and Spanish government bonds slumped on speculation Europe’s aid package may not be sufficient to prevent contagion.

Alcatel-Lucent, France’s largest telecommunications equipment supplier, fell 6.8 per cent to €3.38 as US rival Juniper Networks said sales and profit had missed estimates. – (Bloomberg)