European Stocks Drop, Extending One-Month Low

European Stocks Drop, Extending One-Month Low
By Tom Stoukas - Jun 3, 2013 3:13 PM GMT+0800

European stocks declined for a second day, extending a one-month low, amid concern the Federal Reserve will cut back its debt-buying program and as a gauge of Chinese manufacturing fell. Asian shares dropped while U.S. index futures advanced.
Sanofi slipped 1.3 percent in Paris after saying it will take a $285 million impairment charge. Health-care and technology companies led losses as all 19 industry groups in the benchmark Stoxx 600 retreated.

The Stoxx 600 slid 0.9 percent to 298.23 at 8:11 a.m. in London, the lowest since May 3. The MSCI Asia Pacific Index fell 1.4 percent, on course for the lowest close since February. Standard & Poor’s 500 Index futures rose 0.1 percent after the benchmark U.S. gauge sank 1.4 percent on May 31.
“European equities are set to slide on the open following a weak close in the U.S. on Friday and choppy trading overnight in Asia,” Jonathan Sudaria, a trader at Capital Spreads in London, wrote in e-mailed comments. “U.S. markets took a turn for the worse and proceeded to sell off right into the close on Friday as Fed uncertainty continues to keep traders in a bipolar state.”
The Stoxx 600 climbed 1.4 percent in May, completing a 12th straight month of gains. That was the longest winning streak since July 1997.

China Economy
HSBC Holdings Plc and Markit Economics said their Chinese manufacturing index, released today, fell to 49.2 in May from 50.4 in April. A reading below 50 signals contraction. An official index for the world’s second-biggest economy, released June 1, rose to 50.8 last month from 50.6 in April.
The final reading on a purchasing managers’ index of manufacturing in the 17-nation euro area probably held at 47.8 in May, according to the median estimate of economists in a Bloomberg survey before London-based Markit Economics releases the data today.
In the U.S., the Institute for Supply Management’s factory index held at 50.7 during the month, according to the median forecast in a Bloomberg survey of 71 economists. The data is due at 10 a.m. New York time.
The Stoxx 600 has fallen 4 percent since May 22 as investors weighed the likelihood of the Fed taking steps to reduce monetary stimulus. Fed Bank of San Francisco President John Williams, who has emphasized the need for policy flexibility, will speak at conference held by the Swedish Riksbank at 1:20 p.m. in Stockholm.
Sanofi lost 1.3 percent to 81.41 euros. The Paris-based drugmaker will take an impairment after its Iniparib compound failed to meet the primary endpoint in a phase-three lung-cancer trial. Its Otamixaban anticoagulant has also been discontinued after failing to meet goals, Sanofi said.
Polymetal International Plc (POLY), a Russian gold and silver producer listed in London, gained 2 percent to 704.5 pence. JPMorgan Chase & Co. upgraded the shares to overweight, meaning investors should buy the shares, from neutral, citing changes in pricing and output.
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