European Stocks Drop for Third Day as ThyssenKrupp Falls

European stocks dropped for a third day as investors weighed valuations before U.S. jobs data this week that may help gauge the timing of a reduction in Federal Reserve stimulus. U.S. index futures and Asian shares outside Japan retreated.

ThyssenKrupp AG slid to a 10-week low after raising 882.3 million euros ($1.2 billion) through a share sale. Antofagasta Plc led a measure of mining companies to a seven-week low. Sonova Holding AG (SOON) declined 1.5 percent as Morgan Stanley cut its rating on the Swiss hearing-aid maker. Orange SA slipped 3.4 percent amid concern a price war in the French mobile market will extend to fourth-generation data services.

The Stoxx Europe 600 Index fell 0.9 percent to 321.15 at 11:30 a.m. in London, for its longest losing streak since Oct. 9. The benchmark slid 0.3 percent yesterday, following a three-month rally, as Spanish manufacturing unexpectedly contracted in November. Standard & Poor's 500 Index futures dropped 0.3 percent. The MSCI Asia Pacific Excluding Japan Index slid 0.5 percent, while the Nikkei 225 Stock Average rose 0.6 percent.

"There's been a frenzy for European equities in the last three months and we're now waiting for a short-term consolidation," said Francois Savary, who oversees about $9.4 billion as chief investment officer at Reyl & Cie. in Geneva. "A lot still depends on a few uncertainties in the U.S., such as fiscal and monetary policy, that have the potential to disappoint investors. Market psychology has been too optimistic for Europe and expectations for 2014 growth may be too high."

Earnings Multiple

The Stoxx 600 has rallied 15 percent this year, even as analysts have cut their earnings estimate for its constituents to 21.37 euros per share from 24.13 euros at the beginning of 2013. That has pushed its valuation to 15 times projected earnings, below the 15.72 mark reached in October 2009, which was its highest level since at least March 2005, data compiled by Bloomberg showed.

On Friday, investors will get the latest reading on U.S. non-farm payrolls for November, and data may show the unemployment rate fell to 7.2 percent, matching the lowest level in five years. A jobs report tomorrow may show U.S. companies added the most workers since June. The Fed has said it will monitor labor-market gains before deciding when to pare its $85 billion of monthly bond purchases.

Policy Meetings

The central bank will release its Beige Book on economic conditions tomorrow. The Federal Open Market Committee meets on Dec. 17-18. Policy makers will probably wait until their March 18-19 meeting to pare stimulus, when they will reduce monthly bond purchases to $70 billion, according to the median estimate in Bloomberg's survey on Nov. 8.

The European Central Bank and the Bank of England will both announce policy decisions on Thursday.

In Portugal, the government raised 578 million euros by selling a 70 percent stake in its postal service, CTT-Correios de Portugal SA. It sold the shares at 5.52 euros apiece, the top of the price range it indicated. This was the first initial public offering in the euro area's third-most indebted country since June 2008.

ThyssenKrupp fell 2.8 percent to 17.14 euros. The German steelmaker sold 51.4 million new shares at 17.15 euros apiece. The stock yesterday plunged the most since August 2011 after the company said it would increase its capital by 10 percent of its market value.

Commodity Producers

Antofagasta tumbled 5.3 percent to 739.5 pence. Polymetal International Plc dropped 4.7 percent to 486 pence, its lowest price since July 10. BHP Billiton Ltd., the world's largest mining company, slid 2.1 percent to 1,783 pence. Rio Tinto Group, the second biggest, retreated 1.5 percent to 3,181.5 pence. A gauge of commodity producers posted the biggest retreat among the 19 industry groups on the Stoxx 600.

Sonova lost 1.5 percent to 123.40 Swiss francs. Morgan Stanley downgraded the stock to equal weight, similar to a neutral recommendation, from overweight. New product releases from competitors such as GN Store Nord A/S and William Demant Holding A/S may hurt revenue growth, Morgan Stanley said.

Orange declined 3.4 percent to 9.20 euros. Iliad SA's Free Mobile subsidiary said it will offer customers 4G Internet as part of its monthly plans at no extra cost, according to a statement. Bouygues SA retreated 2.2 percent to 27.12 euros.