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Europe: Stocks decline as energy drop outweighs Credit Suisse
[FRANKFURT] European stocks fell for a third day as a decline in energy shares outweighed better-than-expected results from Credit Suisse Group AG and Unilever.
Oil-and-gas stocks contributed the most to the Stoxx Europe 600 Index's drop, with BP Plc retreating 1.4 per cent. Credit Suisse rose 6.2 per cent after quarterly profit beat estimates. Unilever climbed 1.6 per cent after the maker of Magnum ice cream reported higher-than-forecast sales growth.
The Stoxx 600 slid 0.5 per cent to 398.1 at the close of trading, after earlier rising as much as 0.6 per cent. The volume of shares changing hands was 18 per cent lower than the 30-day average. Shares had advanced to within 2 per cent of their record in a nine-day rally through Monday.
"We expect good profit growth in Europe, so there shouldn't really be a massive rally on the back of a strong earnings season," said Ben Kumar, who helps oversee about US$14 billion at Seven Investment Management in London. "This earnings season is confirming people's positive outlook on Europe and showing that the markets were right to look through Greece to the underlying fundamentals. It's nothing more than that so far." The earnings season is picking up pace in Europe, with more than 200 Stoxx 600 companies scheduled to report through the rest of the month.
Aberdeen Asset Management Plc slid 7.6 per cent after posting 9.9 billion pounds of net outflows in the three months to June as investor sentiment toward Asia and emerging markets soured.
Among energy companies, Royal Dutch Shell Plc lost 1.5 per cent and Tullow Oil Plc slipped 3.7 per cent, as oil approached a bear market.
"It's been such a difficult period for oil-related investments that I believe some investors are throwing in the towel, especially now that apparently the Iran agreements should allow Iran to sell more oil on international markets," said Pierre Mouton, who helps manage US$8.3 billion at Notz, Stucki & Cie in Geneva.
"But there's a limit to that and I see relative value today in major oil companies."
Switzerland's benchmark SMI Index jumped 1 per cent, for the best performance among western-European markets. Roche Holding AG rose 1.6 per cent after the world's biggest maker of cancer drugs reported first-half earnings that exceeded analyst estimates. ABB Ltd. advanced 1.7 per cent after also posting better-than-expected profit.