European stocks fell this week after the US Federal Reserve said the pace of economic recovery was likely to be “more modest” than forecast and European industrial production unexpectedly declined.
Vedanta Resources PLC retreated 20 percent after saying it was in talks with Cairn Energy PLC to buy a stake in the oil explorer’s Indian unit. Micro Focus International PLC fell the most in the STOXX Europe 600 Index after it cut its revenue forecast. Food and beverage shares posted the biggest gain of 19 industry groups after Anheuser-Busch InBev NV reported second-quarter net income that beat forecasts.
The STOXX 600 fell 1.2 percent to 255.56, paring last week’s 1.3 percent rally. The gauge is trading 6.1 percent below this year’s high on April 15 because of concern that the global economic recovery is losing steam as indebted European governments slash spending and China takes steps to tame inflation.
Initial jobless claims in the US rose by 2,000 to 484,000 last week, the highest level in five months, Labor Department figures showed on Thursday. Economists had forecast claims would fall to 465,000, according to the median of 42 predictions in a Bloomberg News survey. Estimates ranged from 450,000 to 480,000.
European industrial production unexpectedly declined in June, led by a drop in durable consumer goods, such as furniture and home appliances. The industrial output of the 16 nations that use the euro dropped 0.1 percent from May, when it increased by 1.1 percent, the EU’s statistics office in Luxembourg said. Economists had predicted a gain of 0.6 percent, the median forecast in a Bloomberg survey showed.
National benchmark indices retreated in all 18 western European markets except Iceland. Germany’s DAX decreased 2.4 percent, the UK’s FTSE 100 dropped 1.1 percent and France’s CAC 40 slumped 2.8 percent.
European construction shares were the worst performing industry this week, dropping 5 percent. HeidelbergCement AG, the largest maker of aggregates used to produce concrete and asphalt, plunged 10 percent. Wienerberger AG, the world’s biggest brickmaker, fell 7.7 percent.
Vedanta, controlled by billionaire Anil Agarwal, lost 20 percent. The copper, zinc, aluminum and iron ore producer wants to acquire more than 50 percent of Cairn India Ltd, leaving the unit’s management in place, said two people with knowledge of the matter who declined to be identified because the talks are private.
Micro Focus, the UK business software maker whose clients include Tesco PLC, sank 33 percent. First-quarter underlying revenue was “flat,” missing management forecasts, the company said. Micro Focus predicted “low single-digit like-for-like revenue growth in the 2011 financial year instead of mid single-digit growth.”
Nobel Biocare Holding AG sank 14 percent, the stock’s biggest weekly decline since April. The company said second-quarter net income dropped 31 percent as expenses increased and the company’s sales failed to keep pace with its two closest competitors.
European food and beverage shares posted the best performance this week as Anheuser-Busch InBev reported net income of US$1.15 billion from US$1.07 billion a year earlier, beating the US$1.08 billion average of 11 analyst estimates compiled by Bloomberg.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
COORDINATION, ASSURANCE: Separately, representatives reintroduced a bill that asks the state department to review guidelines on how the US engages with Taiwan US senators on Tuesday introduced the Taiwan travel and tourism coordination act, which they said would bolster bilateral travel and cooperation. The bill, proposed by US senators Marsha Blackburn and Brian Schatz, seeks to establish “robust security screenings for those traveling to the US from Asia, open new markets for American industry, and strengthen the economic partnership between the US and Taiwan,” they said in a statement. “Travel and tourism play a crucial role in a nation’s economic security,” but Taiwan faces “pressure and coercion from the Chinese Communist Party [CCP]” in this sector, the statement said. As Taiwan is a “vital trading
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