Global stocks drop on German output report
European stocks dropped for the fourth day in five as a report showed German manufacturing unexpectedly contracted this month, while Cyprus's President worked on a new plan to obtain a bailout from the euro area. U.S. index futures were little changed, while Asian shares rose.
Lanxess AG slid the most in eight months after predicting lower first-quarter earnings before interest, taxes, depreciation and amortization than in the previous year.
The Stoxx 600 lost 0.5 percent to 295.2 at 8:37 a.m. in London. The equity benchmark has still risen 5.6 percent this year as reports on U.S. payrolls and Chinese exports bolstered confidence in the global economic recovery and central banks continued their stimulus measures. Standard & Poor's 500 Index futures decreased 0.1 percent today, while the MSCI Asia Pacific Index gained 0.2 percent.
"Investors have come back a bit on Cyprus and the immediate impact it may have on the broader euro zone and have concluded that Cyprus alone isn't enough to re-ignite a crisis," Norman Villamin, who helps oversee $64 billion as European chief investment officer at Coutts & Co. in Zurich, said. "But we look at the tools and the approach being taken and think it's really making any future problems much more risky for euro-zone policy makers to handle."
A purchasing managers' index for Germany's manufacturing industry unexpectedly fell to 48.9 this month. The median economist forecast had called for a reading of 50.5, according to a Bloomberg News survey.
President Nicos Anastasiades met advisers to draft a new plan to stave off financial collapse after lawmakers rejected the euro area's proposed levy on bank deposits.
The alternative plan may include a new version of the deposit tax, according to an official who asked not to be identified citing government policy. The central bank declared that lenders will remain shut for another two days, effectively preventing Cypriots from accessing their accounts until March 26 when they reopen after a national holiday on March 25.
The European Central Bank will probably delay its decision on whether to keep supplying Cypriot banks with emergency funds, two people familiar with the deliberations said yesterday. The ECB may wait to find out whether Cyprus gets a bailout, the people said.
In China, a report showed that manufacturing expanded at a faster pace this month than economists had forecast. The preliminary reading of HSBC Holdings Plc and Markit Economics' purchasing managers' index was 51.7. That compared with the 50.4 final reading for February and January's 52.3. A reading above 50 means that activity increased. In the U.S., Federal Reserve Chairman Ben S. Bernanke said that the central bank will alter its monthly bond purchases in response to changes in the jobs market.
A report at 10 a.m. in Washington may show that sales of previously owned houses rose to the highest level in more than three years. Purchases of existing properties increased to a five million annual rate in February, the most since November 2009, according to the median forecast of 77 economists in a Bloomberg survey. Other data may show an index of leading economic indicators advanced for a third consecutive month.
Lanxess slumped 6.3 percent to 58.09 euros after predicting that Ebitda will drop to as little as 160 million euros ($207 million) in the current quarter.