European stocks declined before a report on U.S. consumer sentiment, amid concern that budget wrangling in Washington will lead to a government shutdown. U.S. index futures retreated, while Asian shares were little changed.
Vallourec (VK) SA plunged 9.5 percent after warning that slower drilling in Brazil and a weak real may hurt profit. Vestas Wind Systems A/S (VWS) surged to its highest price since June 2011 after Mitsubishi Heavy Industries Ltd. and the Danish turbine maker agreed to form a venture to develop offshore wind energy. SEB (SK) SA climbed 4.3 percent after Societe Generale SA lifted its rating on the shares.
The Stoxx Europe 600 Index slipped 0.4 percent to 311.93 at 10:29 a.m. in London. The gauge has lost 0.7 percent so far this week amid concern that U.S. politicians will fail to approve a federal budget for the new financial year. Standard & Poor’s 500 Index futures lost 0.4 percent, while the MSCI Asia Pacific Index gained 0.1 percent.
“It’s been a digestion period,” Andrew Arbuthnott, who helps oversee about $227 billion as fund manager at Pioneer Investment Management Ltd. in Dublin, said by telephone. “There are a few issues weighing on the markets like the budget negotiations in the U.S. and the focus on Italian politics, which have come back to the radar screen.”
The volume of shares changing hands in companies listed on the Stoxx 600 was 13 percent lower than the average of the past 30 days, according to data compiled by Bloomberg. The benchmark gauge has still climbed 4.9 percent in September as the Federal Reserve refrained from reducing its monthly asset purchases, and has surged 9.4 percent since the end of June, heading for the biggest quarterly gain in four years.
In the U.S., data due at 9:55 a.m. New York time may show the Thomson Reuters/University of Michigan’s final September gauge of sentiment climbed to 78 from 76.8 in the preliminary report, according to the median estimate of 64 economists surveyed by Bloomberg.
U.S. lawmakers have until Monday to agree to an emergency budget to keep the federal government operating from Oct. 1, the beginning of the 2014 fiscal year, through Dec. 15. Failure to pass the bill may lead to a government shutdown.
A shutdown of the U.S. government would cut fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, economists said, as government workers from park rangers to telephone receptionists are furloughed. Mark Zandi of Moody’s Analytics Inc. estimated a three-to-four week shutdown would cut growth by 1.4 points. Moody’s projected a 3 percent rate of growth in the fourth quarter without a closure.
Economic confidence in the euro-area increased in September more than economists had forecast. An index of executive and consumer sentiment rose for a fifth month to 96.9 from a revised 95.3 in August, the European Commission in Brussels said today. That beat the median estimate of 96 in a Bloomberg survey.
Vallourec sank 9.5 percent to 44.67 euros. The French producer of steel pipes for the oil and gas industry said after the close of trading yesterday that a weak Brazilian real and slowing of drilling in that country may hurt profit.
Tenaris SA declined 3.8 percent to 17.17 euros. Bank of America Corp cut its rating on the steel-pipe maker to neutral from buy, citing lower near-term earnings expectations due to sluggish trends in North America and Europe.
Countrywide Plc (CWD) dropped 4.1 percent to 522 pence. Alchemy Partners LLP is selling a 5.9 percent stake, about 12.9 million shares, in the U.K.’s largest property broker, according to terms obtained by Bloomberg News. Shares are being sold through an accelerated bookbuild.
Vestas surged 12 percent to 148.80 kroner. Mitsubishi Heavy and the Danish turbine maker agreed to form a venture to develop offshore wind energy. The partnership, to be formed in March 2014 and equally owned by the two companies, will design, procure, build and sell offshore wind power plants, Mitsubishi Heavy said in a statement to the Tokyo Stock Exchange.
SEB climbed 4.3 percent to 65.66 euros. The maker of Tefal pans and Rowenta household appliances was lifted to a buy from hold at Societe Generale, which cited a recovery of sales in Europe, operating margin expansion in 2014 and an attractive valuation relative to competitors.
Telekom Austria AG (TKA) advanced 3.7 percent to 6.15 euros. The phone company part-owned by Carlos Slim’s America Movil SAB is heading for its biggest weekly gain since 2009 amid speculation that the Mexican billionaire may take full control.