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Wall Street Journal features Stephen Pope & Spotlight Ideas

Friday June 28th 2013


European stock markets ended a three-day winning streak on Friday, dragged lower in part by concerns over growth in emerging markets and U.S. interest-rate policy.

The Stoxx Europe 600 index ended the session down 0.5% at 285.02, putting an end to a three-session string of gains. The index finished June with a loss of 5.3%, for a second-quarter drop of nearly 3%.

For the week, it managed a gain of 1.7%.

"Given it is week, month and quarter end, there is an atmosphere across all key markets of book squaring," said Stephen Pope, managing partner at Spotlight Ideas.

"I am building a sector model and see that while energy has been flat all year, the sectors that are really under pressure are basic resources, consumer cyclical and technology," Pope said, in emailed comments.

Markets reversed the advance seen a day earlier.

British American Tobacco PLC was the biggest decliner in the Stoxx 600 on a weighted basis, dropping 2.2%.

Shares of Heineken NV dropped 1.8% after Nomura cut its rating on the group to reduce from neutral. Analyst Ian Shackleton said he continues to see short-term trading pressure on the beer group, especially within western Europe, along with increased currency headwinds and signs of slowing momentum in some emerging markets. He also said an update from SABMiller PLC was also set to disappoint, with those shares losing 2.1%.

Earlier in the day, economic data showed U.K. consumer sentiment reaching the highest level since October 2010, and house prices higher, while German retail sales were better than expected in May.

But investors were largely distracted by the U.S., where sentiment data came in mixed. Federal Reserve Gov. Jeremy Stein suggested the central bank's first tapering move could be in September.

London's FTSE 100 index fell 0.5% to 6,215.47, after gaining 1.3% the prior session. Miners were sputtered after gains Thursday, with Rio Tinto PLC and BHP Billiton PLC falling by around 0.7% each.

Banks were also losers, with Barclays PLC off 2.7%. The bank reportedly said Friday at an investor presentation that it may have to cut lending in order to meet a 3% leverage ratio required by the government, and could move 4,000 jobs out of high-cost locations by 2015. Chief Executive Anthony Jenkins said Friday the bank would hit the target by 2015 under current plans.

The French CAC 40 index fell 0.6% to 3,738.91, weighed by losses for Sanofi, while luxury-goods group LVMH Moet Hennessy Louis Vuitton SA fell 1.6% and BNP Paribas SA lost more than 1%.

The German DAX 30 index lost 0.4% to 7,959.22, with drug maker Bayer AG down 0.3%, and business software group SAP AG dropping 3%. SAP fell after partner Accenture PLC issued a disappointing revenue forecast the prior day.

Shares of ThyssenKrupp AG rose more than 3% after the German newspaper Sueddeutsche Zeitung reported that state-controlled RAG trust could be buying a stake in the steelmaker. A spokesperson for ThyssenKrupp could not immediately be reached for comment.

Spanish stocks also fell with the Spain IBEX 35 index dropping 1% to 7,762.70. Banks led the downside with BBVA SA off 1.4% and Banco Santander SA dropping 1.3%. A day earlier, the Bank of Spain said it wrote to lenders asking them to limit cash dividends to investors to 32% of profit.


Write to Sara Sjolin at AskNewswires@dowjones.com

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