European stocks dropped for a second day as Moody’s Investors Service downgraded Spain and Cyprus, while Switzerland’s central bank said that Credit Suisse Group AG must increase its capital this year.
Credit Suisse slumped 10 percent to its lowest price since 1992. British Sky Broadcasting Group Plc and BT Group Plc tumbled 3.2 percent and 3.5 percent, respectively, after winning the rights to show live English Premier League football matches by paying an extra 70 percent. Nokia Oyj plunged 18 percent after reducing its outlook for the second quarter.
The Stoxx Europe 600 Index dropped 0.3 percent to 241.91 at 4:30 p.m. in London, extending its slide from this year’s high on March 16 to 11 percent.
The VStoxx Index, a measure of Euro Stoxx 50 Index options prices, slipped 2.5 percent to 33.01, snapping three days of gains. The volume of shares trading on the Stoxx 600 Thursday was 18 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
National benchmark indexes retreated in nine of the 18 western-European markets Thursday. The U.K.’s FTSE 100 and Germany’s DAX dropped 0.2 percent. Greece’s ASE Index rallied 10 percent for its biggest climb since August.
Moody’s cut Spain’s rating by three steps to Baa3 from A3 late Wednesday, citing the nation’s increased debt burden, weakening economy and limited access to capital markets. Moody’s also lowered Cyprus’s bond rating to Ba3 from Ba1, attributing the downgrade to the increased likelihood of Greece leaving the euro area. The country’s government may have to give more support to Cypriot banks as a consequence.
The yield on Spain’s 10-year debt rallied as high as 6.998 percent Thursday, the highest since before the Mediterranean nation started using the euro in 1999.
Italy sold 4.5 billion euros ($5.7 billion) of debt, matching its maximum target, at an auction. The country’s Treasury sold 3 billion euros of its three-year benchmark bond to yield 5.3 percent. That compared with a yield of 3.91 percent when it last sold the securities on May 14.
Credit Suisse reduced its estimate for China’s growth to 7.7 percent from 8 percent, while Deutsche Bank AG lowered its forecast to 7.9 percent from 8.2 percent, according to research notes. The predictions indicate that China’s economy will expand at the slowest pace since 1999.
Credit Suisse tumbled 10 percent to 17.01 Swiss francs, its biggest decline since 2008, as the Swiss National Bank said it needed a “marked increase” in capital this year to prepare for risks from a possible escalation of the euro area’s sovereign-debt crisis.
BSkyB sank 3.2 percent to 673 pence, the biggest plunge since April, after its pay-TV Sky channel increased its spending to retain the rights to show most Premier League games.From the daily star.