Stocks fall as euro weakens to four-month low

European Markets

The Stoxx 600 erased an earlier advance as financial, telecommunications and automobile companies led the equity benchmark lower. TDC A/S retreated 1.6% as the Danish phone operator’s private-equity owner put a 6.8% stake on sale. Safran SA dropped 1.2% as France sold about 13 million shares in Europe’s second-biggest maker of aircraft engines, according to the country’s finance ministry.

Mediaset SpA rallied 5.8% after reporting sales for 2012 that beat analysts’ estimates. The Italian broadcaster controlled by former Italian Prime Minister Silvio Berlusconi also said that it won’t pay a dividend for the first time.

The bailout in Cyprus that imposes levies on bank deposits is tailor-made for the country’s situation and is not a template for other nations, according to a document agreed on yesterday by representatives of euro-area finance ministries.

The statement pushed back against the impression given by Dutch Finance Minister Jeroen Dijsselbloem that spurred concern deposits in other nations may be vulnerable to similar so-called bail-ins. Banks in Portugal, Spain and Italy may come under funding pressure after the Cyprus rescue, the Institute of International Finance said in a report today.

‘Risk Premia’

“The precedent set by Cyprus and the political uncertainty in Italy mean that risk premia in the euro region will continue to go wider,” said Adam Cole, head of Group of 10 currency strategy in London at Royal Bank of Canada. “The risk of the bail-in of depositors in a future banking crisis has increased and market prices have to reflect that.”

The euro weakened against 15 of its 16 major peers and traded below its 200-day moving average for a third day against the dollar. The pound dropped 0.3% to $1.5115. GDP fell 0.3%, the same as previously estimated by the Office for National Statistics.

Sweden’s krona strengthened for a third day against the euro, appreciating 0.3%, as data showed consumer confidence rose more than economists estimated this month and retail sales jumped in February.

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