ZURICH, Oct 25 — A two-day lull for European equities ended as Novartis AG led drugmakers down after reporting earnings.
The Swiss maker of cancer treatments slid 3 per cent, the biggest drag on the Stoxx Europe 600 Index, after its profit fell for a seventh straight quarter. Roche Holding AG, in which Novartis owns a stake, dropped 1.1 per cent. Novo Nordisk A/S lost 1.7 per cent after US peer Eli Lilly & Co. posted disappointing sales of its insulin drug.
The Stoxx 600 fell 0.3 per cent at 4:04pm in London, reversing an earlier gain of as much as 0.4 per cent. Gains in miners limited declines for the benchmark. A gauge of commodity producers headed for its highest level in 14 months, while trading near its lowest valuations relative to the broader benchmark since January.
Anglo American Plc and Rio Tinto Group rose at least 4.1 per cent, tracking a rally in metal prices on optimism the global economy is becoming more resilient. Stabilising commodity prices have prompted analysts to temper their estimates for 2016 profit declines at Stoxx 600 miners. Forecasters who saw a contraction of 51 per cent in April are now projecting a drop of only a third as much, followed by growth of 27 per cent next year.
European stocks rose to a two-week high on October 20 on optimism monetary policy will stay supportive of growth, before losing momentum in the past two sessions. Speculation about the future of the European Central Bank’s quantitative easing and the timing of the Federal Reserve’s next interest-rate increase have weighed on stocks in recent weeks, keeping them in a tight range.
While ECB President Mario Draghi eased investor concern about its bond-buying programme ending too soon, he gave little indication on how officials will extend, adjust or wind down QE that’s set to expire in March.
Italian firms led declines in banks today, with UniCredit SpA and UBI Banca SpA sliding at least 3 per cent. Banca Monte dei Paschi di Siena SpA swung from a rise of as much as 27 per cent to a decline of 23 per cent before trading was temporarily halted. While Chief Executive Officer Marco Morelli pledged to begin talks with potential new investors this week, he said the transaction won’t go ahead if it’s not possible to raise 5 billion euros in capital. — Bloomberg
