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European stocks fall as oil weighs on energy shares

Frankfurt - European stocks fell from a three-month high as some companies posted disappointing earnings reports, while a slide in oil prices weighed on energy producers.

SAP helped drag technology shares lower after first-quarter sales rose less than analysts expected. BP led declines in oil stocks after workers in Kuwait said they would end a strike that had disrupted crude output. BHP Billiton and Rio Tinto paced miners higher with gains of at least 2.4% after BHP cut its iron ore production forecast for its Australian operations, spurring gains in the metal’s price.

The Stoxx 600 slipped 0.2% to 348.46 at 13:23, snapping a two-day advance that had pushed it out of a holding range it was languishing in for a month. While shares climbed yesterday, the European gauge has still tumbled 16% since reaching a record a year ago, and optimism over European Central Bank (ECB) stimulus has given way to skepticism about its ability to boost growth.

“It’s difficult to find a major positive trigger from here,” said Otto Waser, chief investment officer at R&A Research & Asset Management. “Central banks are done so we don’t expect anything positive from them anymore. Earnings trends are not positive enough in Europe to support a major positive market.”

While economists are virtually certain Mario Draghi won’t touch interest rates at Thursday’s ECB meeting, recent history shows that increased stock volatility is still likely. Intraday swings for the Euro Stoxx 50 Index averaged 4.1% during the ECB President’s past four policy updates, or about double that for all meetings since 2010.

Crude fell 2.1% as the three-day strike in OPEC’s fourth-largest producer ended. The disruption had propped up oil prices after major producers failed to agree to output curbs at weekend talks in Doha.

“The volatility in oil will not come to an end, as supply and demand are not in focus,” said Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany. “We must accept that it’s a game of power and not fundamentally based anymore.”

Among stocks moving on corporate news today, Commerzbank AG fell 1.5% after chief executive officer Martin Blessing said a slow first quarter will make it more difficult to match last year’s profit, just a month after the bank projected an increase in full-year earnings.

Telia AB climbed 1.3% after the Swedish carrier reported better-than-estimated first-quarter earnings as investments in faster Internet boosted demand in its home market. ABB rose 3.4% after the world’s largest maker of power grids posted higher-than-forecast first-quarter profit.

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