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Europe stocks fall for 2nd day as Daimler leads carmakers lower

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[FRANKFURT] European stocks slid further away from a three-month high, trimming a second weekly advance, as carmakers led declines.

Daimler AG tumbled 5.6 per cent after its quarterly operating profit fell. Volkswagen AG lost 1.1 per cent, paring a drop of as much as 6.1 per cent, after more than doubling the provisions toward payments in its cheating scandal. PSA Peugeot Citroen fell 2 per cent after government fraud investigators searched the group's premises in France as part of a probe into vehicle emissions.

The Stoxx Europe 600 Index lost 0.4 per cent at 4:33 pm in London, paring an earlier drop of as much as 0.8 per cent. Traders sent the benchmark lower yesterday for the first time in four sessions as they remained unconvinced by the European Central Bank's stimulus program even after President Mario Draghi urged critics to give it time to work.

"What we're seeing today is a bit of profit-taking on the gains we've seen in the past couple of weeks," said Michael Hewson, a London-based market analyst at CMC Markets Plc. "I'm not convinced we will see it degenerate into a much deeper selloff in the short to medium term."

Advances in commodity and energy producers have led a rally in European equities in the past two months. The Stoxx 600 surged 16 per cent from a February low to its highest level since Jan 6 on Wednesday. It's poised for a weekly advance of 1.6 per cent.

The gains have come even as analysts slashed their profit estimates for the region's companies. They now predict an earnings decline in 2016 for Stoxx 600 firms, reversing calls for growth at the start of the year.

Among shares moving on financial results, Kering SA slid 5.2 per cent after the Gucci owner reported first-quarter revenue that trailed analysts' estimates. Volvo AB rose 4.9 per cent on better-than-estimated earnings.

Zodiac Aerospace SA jumped 10 per cent after people familiar with the matter said Safran SA is considering an offer for it. Safran lost 3 per cent.

The slide in automakers dragged the DAX Index down 0.7 per cent, after the German benchmark came within 1 per cent of entering a bull market yesterday. The UK's FTSE 100 Index fell 1 per cent, the worst performers in Europe. Greece's ASE Index rose the most, up 1.2 per cent, after its creditors signaled a deal on the country's next bailout installment is in sight.

BLOOMBERG