European stocks fluctuated, following their biggest two-day drop in eight months, as Moody’s Investors Service lowered its credit outlook for Germany. US index futures retreated, while Asian shares were little changed.

Elan Corp. tumbled 18 per cent after the results of a study for an Alzheimer’s drug failed to show that patients’ symptoms improved. Swatch Group AG gained 2.4 per cent after posting sales and profit that increased. Man Group Plc surged 8.5 per cent after saying it will double its cost cuts.

The Stoxx Europe 600 Index slid 0.1 percent to 251.51 at 11:59 a.m. in London after earlier climbing as much as 0.5 per cent and dropping as much as 0.3 per cent. The benchmark measure slumped 2.5 per cent yesterday as concern mounted that Greece will default and more Spanish regions will follow Valencia in seeking a bailout. Standard & Poor’s 500 Index futures declined 0.3 percent, while the MSCI Asia Pacific Index lost 0.1 percent today.

“There should be a kind of correction over yesterday, but the Moody’s news plus the purchasing managers’ index are dragging the markets down,” said Theodore Krintas, managing director of Attica Wealth Management in Athens.

Germany, the Netherlands and Luxembourg had the outlooks for their Aaa credit ratings lowered to negative by Moody’s Investors Service after markets closed yesterday. The ratings company cited the risk that Greece will leave the 17-nation euro currency and the “increasing likelihood” of collective support for European countries such as Spain and Italy, according to a statement.

“Given the unwavering train wreck that is the euro zone and the ever escalating forecasts for bailouts, it hasn’t come as a surprise that Germany’s credit rating — the ultimate financial backstop — has begun to come into question,” Jonathan Sudaria, a dealer at Capital Spreads in London, wrote in a note.


German PMI


German manufacturing and services output contracted in July more than economists had forecast. An index based on a survey of purchasing managers in the manufacturing industry declined to 43.3 this month from 45 in June, London-based Markit Economics said in a report. Economists had predicted a reading of 45.1. The measure of Germany’s services industries slipped to 49.7 from 49.9. Economists had projected 50.

A composite index for the euro area’s manufacturing and services industries held at 46.4 in July. That matched the median estimate of economists surveyed by Bloomberg News.

Officials from Greece’s troika of international creditors — the European Commission, the European Central Bank and the International Monetary Fund - arrive in Athens today amid doubts that the nation will abide by the commitments needed to obtain continued financial aid.


Elan plunges


Elan tumbled 18 per cent to 9.05 euros, its biggest slide since 2009. The company’s experimental Alzheimer’s treatment with Pfizer Inc. and Johnson & Johnson failed to improve symptoms of dementia in the first of four studies of the drug.

STMicroelectronics NV dropped 4.5 per cent to 3.77 euros. Europe’s largest chipmaker forecast third-quarter revenue will grow by about 2.5 per cent, indicating sales will miss analysts’ estimates amid weaker demand for the company’s products.

Royal KPN NV fell 3 per cent to 7.11 euros. The Dutch phone company that is partially controlled by Carlos Slim’s America Movil SAB cut its dividend forecast by 61 per cent after posting quarterly profit that missed analysts’ estimates.


ProSiebenSat declines


ProSiebenSat.1 Media AG, a German broadcaster controlled by KKR & Co. and Permira Advisers LLP, lost 3.2 per cent to 16.27 euros, sliding for a third day. The stock was downgraded to equal weight from overweight by Barclays Plc, meaning that investors should not buy more of the company’s shares.

Spanish builder Actividades de Construccion & Servicios SA plunged 7.4 per cent to 10.57 euros, dropping for a tenth day. Acciona SA and Endesa SA tumbled 7.7 percent to 31.02 euros and 4.8 per cent to 11.76 euros, respectively.

Dutch insurer Delta Lloyd NV decreased 3.9 per cent to 9.73 euros. A gauge of insurance stocks posted the worst performance of the 19 industry groups on the Stoxx 600.

Swatch rose 2.4 per cent to 370.20 Swiss francs. The biggest maker of Swiss watches reported first-half profit that beat analysts’ estimates as sales of Omega and Longines timepieces to Chinese consumers increased. Net income rose to 720 million francs ($725 million) from 575 million francs a year earlier, the Biel, Switzerland-based company said.

Man Group rallied 8.5 per cent to 75 pence. The world’s biggest publicly traded hedge fund manager also said it plans to sell fewer so-called guaranteed products that generate high commissions for employees.

Provident Financial Plc surged 10 per cent to 1,292 pence. The UK’s biggest subprime lender said first-half net income jumped 20 per cent from a year earlier after the number of customers taking out high-interest credit cards increased.

Societe Television Francaise 1 advanced 4.5 per cent to 6.61 euros. The stock was raised to overweight from equal weight at Barclays Plc, meaning that investors should buy the shares.