European stocks fall on Trichet comments

European stocks declined after European Central Bank President Jean-Claude Trichet said he's committed to fighting inflation, damping optimism that borrowing costs may drop anytime soon.

Stocks reversed earlier gains in Europe after Trichet's comments, led by BHP Billiton Ltd, Eni SpA and HBOS Plc. The Bank of England said yesterday consumer prices may rise at a faster pace this year. Apple Inc slid in Germany after its forecast missed analysts' estimates.

"We need to remember that just because the Fed cuts (interest rates) aggressively, the other central banks will not," said Jane Coffey, head of equities at Royal London Asset Management, where she helps oversee about $11 billion. "The BOE and the ECB have a remit to control inflation. The Fed has a dual role to monitor inflation and growth and right now they are focused on growth."

The Dow Jones Stoxx 600 Index lost 1.6 percent to 310.56 as of 11:35 am in London, after rising as much as 1.6 percent earlier. Standard & Poor's 500 Index futures expiring in March lost 1.5 percent to 1,289.5.

Commodity producers BHP and Eni followed declines in metals and oil prices, while HBOS declined after ABN Amro Holding NV recommended selling the stock.

National benchmarks declined in all 18 markets in Western Europe except Luxembourg and Greece. The United Kingdom's FTSE 100 slipped 1.4 percent. France's CAC 40 lost 2.3 percent. Germany's DAX Index fell 3 percent.

The Stoxx 50 declined 2.2 percent, and the Euro Stoxx 50, a measure for the euro region, dropped 2.7 percent.

BHP Billiton, the world's biggest mining company, dropped 3 percent to 1,261 pence. Rio Tinto Group, the third-largest, retreated 2.5 percent to 4,189 pence.

Copper for delivery in three months on the London Metal Exchange dropped $43 to $6,977 a ton.

Eni, Italy's biggest oil company, slid 4.3 percent to 21 euros. BP Plc, Europe's second-largest oil producer, sank 3.2 percent to 509.5 pence.

Crude for March delivery fell as much as 77 cents to $88.44 a barrel in electronic trading on the New York Mercantile Exchange.

HBOS, Britain's biggest mortgage lender, slipped 2.4 percent to 644 pence after ABN Amro cut its recommendation to "sell" from "hold".

"We see a high possibility that HBOS will either need to raise new equity or sharply disappoint on loan volumes," ABN Amro wrote in a research note.

Agencies

(China Daily 01/24/2008 page17)