Evidence that Europe’s economic woes are hurting companies’ earnings potential and weakening investor confidence sent the region’s shares lower for a sixth day, their longest slump in almost three years.
Burberry Group Plc dropped the most in a year after the U.K.’s largest luxury-goods maker said it expects a difficult environment to weigh on profitability this year. Recruitment consultancy Michael Page International Plc tumbled to a 15-month low after saying full-year profit will miss analysts’ estimates.
The Stoxx Europe 600 Index dropped 0.5 percent to 319.91 at 3:02 p.m. in London, paring earlier losses of as much as 1.4 percent. The gauge has lost 4.7 percent since Oct. 6 as the International Monetary Fund cut its global-growth forecasts, German industrial output shrank the most since 2009 and investors weighed the impact of the Ebola epidemic.
“It’s a tough time for corporations,” John Haynes, the London-based head of research at Investec Wealth & Investment, said by telephone. “The background economic situation hasn’t been too forgiving, and they tend to have to come out and mark expectations to the market for the full year. Worries about Europe will be short-term in nature rather than more entrenched, but it’s not going to be easy to see the fog.”
German investor confidence decreased for a 10th month in October, a report showed today. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations declined to minus 3.6 this month from 6.9 in September. That’s the lowest level since November 2012. Economists had forecast a drop to zero, according to the median of 35 estimates in a Bloomberg News survey.
Burberry fell 4.1 percent to 1,418 pence. The company said demand from travel retail and European customers will be “more cautious” in the second half and the company expects “slight downward pressure” on margins. Burberry also reported first- half sales of 1.1 billion pounds ($1.77 billion), meeting analysts’ estimates.
A gauge of personal and household-goods makers posted the second-biggest loss among the 19 industry groups in the Stoxx 600. Mulberry Group Plc tumbled 12 percent to 662.5 pence after the luxury-products maker said it expects full-year earnings to come in “significantly” below projections.
Michael Page International Plc dropped 9.6 percent to 375.9 pence, the biggest retreat since 2011. The company forecast 2014 operating profit will be below analysts’ estimates and cited “fragile” confidence in Europe, Middle East and Africa regions and slower growth rates in Asia.
Iliad SA advanced 11 percent to 172.95 euros, its biggest gain in seven months. The Paris-based telecommunications provider abandoned a plan to buy a majority stake in T-Mobile US Inc. after an improved bid was spurned by the wireless carrier’s owner Deutsche Telekom AG. Iliad is the second suitor to walk away from a deal this year after Japanese billionaire Masayoshi Son’s Sprint Corp. unit abandoned a merger plan with T-Mobile.
Daimler AG gained 3.8 percent to 58.84 euros after the world’s third-largest maker of luxury cars said its cash flow from industrial operations surged about 80 percent in the third quarter.