European stocks retreated for a third day, led by a selloff in banks, after Citigroup Inc. and Bank of America Corp. reported revenue that missed analysts' estimates and US consumer confidence fell more than forecast.
Barclays Plc, Credit Agricole SA and Credit Suisse Group AG declined more than 2.5 per cent. RWE AG and E.ON AG led utilities lower after Germany proposed a tax on nuclear power plants. Roche Holding AG sank 4.2 per cent as US regulators said the drugmaker's top-seller Avastin didn't slow breast tumors in new studies as much as in earlier tests used to win approval.
The Stoxx Europe 600 Index dropped 1.9 per cent to 248.11, erasing the measure's gains for the week even as company earnings from Alcoa Inc. to Intel Corp. beat estimates. The gauge has fallen 8.8 per cent from this year's high on April 15 amid concern that the global economic recovery is losing steam.
``There is nervousness around,'' said Bill Dinning, head of strategy at Aegon NV's Edinburgh-based fund management unit. ``Investors are concerned that even with good earnings from Q2 there are still question marks out there. Clearly we have started to see some slowing in the economy.''
National benchmark indexes fell in all of the 18 western European markets, except Greece, with stocks extending losses after the Thomson Reuters/University of Michigan preliminary index of US consumer sentiment for July slid to the lowest level in a year. Germany's DAX lost 1.8 per cent, France's CAC 40 sank 2.3 per cent and the U.K.'s FTSE 100 slid 1 per cent.
US earnings
European stocks earlier swung between gains and losses as US companies from General Electric Co. to Bank of America and Citigroup reported second-quarter results. All three companies beat estimates for per-share earnings while missing on sales.
Barclays, the U.K.'s third-largest bank, declined 5.2 per cent to 284.65 pence. Credit Agricole, France's biggest bank by branches, slid 3.8 per cent to 8.93 euros and Switzerland's Credit Suisse dropped 2.7 per cent to 43.03 Swiss francs.
A measure of European banks posted the biggest drop among the 19 industry groups in the Stoxx 600, even as Goldman Sachs Group Inc. agreed to pay $US550 million and change its business practices to settle a US fraud lawsuit.
Utility shares recorded the third-largest slide on the regional benchmark gauge, with RWE plunging 4.3 per cent to 52.33 euros and E.ON sinking 4.9 per cent to 21.78 euros. The German government is proposing a tax on nuclear power plants that applies each time a reactor receives new fuel rods designed to generate 2.3 billion euros ($US3 billion) of revenue a year, Finance Ministry spokesman Michael Offer told reporters in Berlin today.
Fortum, Roche
Fortum Oyj dropped 5.5 per cent to 18.05 euros after the Nordic region's second-largest utility reported second-quarter net income of 263 million euros. That missed the average analyst estimate of 285 million euros, according to a Bloomberg survey.
Roche led pharmaceutical shares lower, falling 4.2 per cent to 144.5 francs. Avastin paired with chemotherapy treatments didn't help patients survive longer than use of the other drugs alone, according to a US Food and Drug Administration staff review. FDA advisers will meet July 20 to evaluate the drug and consider whether use in breast cancer should be continued, expanded or halted.
Elan Corp. lost 2.3 per cent to 3.85 euros after the Irish drugmaker said it expects to pay $US203.5 million to settle US government charges linked to the sale and marketing of the Zonegran epilepsy treatment.
BP gains
BP Plc which has been battling to contain the worst US oil spill in history, advanced 1.3 per cent to 407.15 pence. The company said it's ``encouraged'' after a pressure test that halted the flow from its Gulf of Mexico well indicated no sign of an oil leak after the first 17 hours.
Separately, BP may reach an agreement as soon as next week to sell assets including half its stake in Alaska's Prudhoe Bay field to Apache Corp. for $US10 billion to $US11 billion, according to two people familiar with the matter.
Yara International ASA climbed 5.2 per cent to 222.5 kroner after the largest publicly traded nitrogen-fertilizer maker said second-quarter net income was 3.72 billion kroner ($US600 million), beating an analyst estimate of 3.61 billion kroner.
Rival K+S AG, Europe's biggest potash producer, gained 2.6 per cent to 38.90 euros.
Rautaruukki Oyj jumped 8.6 per cent to 14.33 euros after raising its 2010 sales forecast, saying revenue will grow 25 per cent to 30 per cent over last year. The previous target was for 15 per cent to 30 per cent growth. Rautaruukki said it also expects to post a pretax profit this year.
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