European stocks fell as escalating violence in Iraq threatened oil supplies, and U.K. property companies slid after Britain promised new measures to restrict mortgage lending.
U.K. builders including Barratt Developments Plc slipped after Chancellor of the Exchequer George Osborne pledged to increase the Bank of England’s power to restrict borrowing. A gauge of European oil companies advanced the most on the Stoxx Europe 600 Index. Geberit AG gained 1.6 percent after Goldman Sachs Group Inc. raised its rating on the maker of toilets and bathroom piping.
The Stoxx 600 retreated 0.4 percent to 346.3 at 3:02 p.m. in London, heading for a weekly drop of 0.3 percent. The measure closed little changed yesterday as U.S. retail sales grew slower than estimated and more Americans than forecast applied for unemployment benefits.
“The developments in Iraq will continue to be on investors’ radars as a spike in oil prices always holds the potential to spook market participants,” said Mark Andersen, co-head of global asset allocation at UBS AG’s wealth-management unit in Hong Kong.
Escalating violence in Iraq is raising the prospect of further supply disruptions for OPEC’s second-biggest oil producer. Prime Minister Nouri al-Maliki’s Shiite-led government is struggling to dislodge fighters from the group calling itself the Islamic State in Iraq and the Levant after they overran army positions in Mosul this week. U.S. President Barack Obama said he won’t rule out using air strikes to help the government in Baghdad.
In the U.S., a report showed that consumer confidence unexpectedly declined in June. The Thomson Reuters/University of Michigan preliminary index of sentiment fell to 81.2 from 81.9 in May. The median projection in a Bloomberg survey of economists called for 83.
National benchmark indexes declined in all of the 18 markets in western Europe, except Spain. Germany’s DAX slid 0.5 percent, France’s CAC 40 lost 0.4 percent, and the U.K.’s FTSE 100 dropped 0.9 percent.
Barratt Developments slid 6.3 percent to 346.4 pence. Land Securities Group Plc and British Land Co. fell 3.7 percent to 1,035 pence, and 4.2 percent to 687 pence, respectively. Under Osborne’s plans, the BOE’s Financial Policy Committee could cap the size of mortgages as a multiple of income or as a proportion of the value of the property. Bank of England Governor Mark Carney said rising U.K. mortgage debt may threaten Britain’s recovery as he signaled interest rates may start to rise sooner than markets expect.
A gauge of oil-related companies posted the best performance of the 19 industry groups on the Stoxx 600 as oil prices increased. Total SA, France’s largest oil company, rose 1 percent to 52.92 euros.
CGG SA surged 10 percent to 10.86 euros, the most in more than a year, amid speculation that Baker Hughes Inc. may bid for the world’s largest seismic surveyor of oilfields, according to Jawaid Afsar, a trader at Securequity Ltd. in Sheffield, England. CGG declined to comment.
Geberit gained 1.6 percent to 308.70 Swiss francs after Goldman Sachs raised its rating on the company to buy from sell, citing the likelihood of further market-share gains in Europe and emerging markets.