EU stocks fall as Obama holds bud­get talks

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BRUSSELS

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.

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