(Bloomberg) -- European stocks dropped for a third straight session as investors tracked a busy week of corporate earnings and the outlook for Federal Reserve interest-rate cuts.
The Stoxx Europe 600 Index fell 0.3% by the close. The three-day decline marked its longest losing streak in over six weeks. L’Oreal SA slid after it posted disappointing sales last quarter as the beauty company suffers from worsening consumer demand in China.
Autos and utilities outperformed, while miners were the biggest laggards. Among other earnings-driven moves, Deutsche Bank AG dropped as analysts noted higher-than-expected provisions. Heineken NV gained after the brewer reiterated its guidance, outweighing worse-than-expected beer volumes.
Europe’s benchmark index has struggled to break out of a range after recovering from the summer selloff. While bets on resilient economic growth have boosted sentiment, there’s growing concern that the Fed may cut rates at a slower-than-expected pace. Traders have reduced the odds of reductions through May over the last week, according to swaps data.
The 10-year US bond yield remained above 4.2% Wednesday, hovering at the highest since July.
“While declining short-term rates should boost the economy and corporate earnings growth, rising long-term bond yields will imply a higher discount on future cash flows and a de-rating of stock markets,” said Panmure Liberum strategist Susana Cruz. “Value stocks are best positioned to outperform in this environment.”
The third-quarter reporting season is off to a mixed start. About 42% of MSCI Europe companies have beaten estimates so far, while 34% have missed, according to data compiled by Bloomberg Intelligence.
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