EU stocks fall as Obama holds budget talks
European stocks fell for a third day, extending a twomonth low, as U.S. President Barack Obama prepared to hold talks with Republican lawmakers on the country’s so-called fiscal cliff. U.S. index futures dropped, while Asian shares rose.
STMicroelectronics NV (STM) sank 2.8 percent as people familiar with the matter said the company will probably decide against splitting itself in two. Henkel AG & Co. KGaA dropped 4.7 percent as sales missed projections. Royal Boskalis Westminster NV jumped 5.9 percent after raising its 2012 profit forecast.
The Stoxx Europe 600 Index slipped 0.4 percent to 264.43 at 9:30 a.m. in London, after earlier rising 0.2 percent. The benchmark measure has lost 3.8 percent since Obama’s re-election on Nov. 6 as traders turned their focus to the $607 billion of tax increases and spending cuts that automatically come into force at the beginning of next year if Congress doesn’t act. The gauge has retreated 2.2 percent this week for a the biggest decline since September.
“Investors’ attention is focused on the meeting between lawmakers in the U.S. today to discuss the fiscal cliff,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva, which oversees about $26 billion. “If they can’t agree in the coming days, we would be in a similar situation as last year when Republicans and Democrats couldn’t agree on raising the debt ceiling. General expectation is that they’ll come to an agreement in the last minute, but until then markets will be nervous and rather shaky.”
Standard & Poor’s 500 Index futures fell 0.4 percent, indicating the U.S. gauge will extend this week’s 1.9 percent drop. The MSCI Asia Pacific Index (MXAP) advanced 0.6 percent as Japan’s Nikkei 225 Stock Average surged the most in two months amid speculation an election next month will hand power to an opposition party that advocates more aggressive monetary easing in the world’s third-biggest economy. Obama holds his first faceto-face talks with House Speaker John Boehner since the presidential election today. He also hosts House Minority Leader Nancy Pelosi, a California Democrat, Senate Majority Leader Harry Reid, a Nevada Democrat, and Senate Minority Leader Mitch McConnell, a Kentucky Republican. Obama’s insistence on higher taxes for top earners and Republicans’ refusal to raise rates leaves negotiators with arithmetically complex and politically fraught choices.
Today’s meeting features the same people who failed to reach an agreement during debt-ceiling talks in 2011. Obama leaves for Asia tomorrow and Congress is departing Washington until Nov. 26 for the Thanksgiving recess.
Industrial production in the U.S. may have cooled in October as superstorm Sandy knocked out power for utility customers in the Northeast. Output at manufacturers, mines and utilities rose 0.2 percent after a 0.4 percent increase in September.