Stocks: Friday’s review

European stocks fell, snapping four days of gains, after yesterday rising to their highest valuation since 2010, and as European Union leaders failed to discuss further aid for Spain.

Leaders committed to their goal of establishing a euro-area bank supervisor by the end of the year. The EU will seek to agree on a framework that makes the ECB the main supervisor by Jan. 1, according to conclusions released early today after leaders met. The new system, intended to break the link between banks and governments at the root of the region’s financial crisis, will phase in over the next year and could cover all 6,000 euro-area banks by Jan. 1, 2014, a year later than initially targeted.

Still, the move doesn’t settle the question of when the European Stability Mechanism will be able to recapitalize banks directly. The plan calls for the supervisor to take charge of big banks and bailed-out institutions first, while also saying direct assistance requires “effective” supervision in place.

German Chancellor Angela Merkel said after the summit that it’s an open question whether European policy makers can meet the deadline they’d set hours earlier to establish a euro-area bank supervisor.

FTSE 100 5,896.15 -20.90 -0.35%, CAC 40 3,504.56 -30.62 -0.87%, DAX 7,380.64 -56.59 -0.76%

STMicroelectronics NV, Europe’s largest semiconductor maker, fell 3.5 percent to 4.78 euros as Banco Santander SA cut its price estimated on the shares to 5.20 euros from 6.75 euros.

Valeo SA advanced 3 percent to 35.95 euros. France’s second-largest car-parts maker said third-quarter revenue rose 6.8 percent to 2.84 billion euros from 2.66 billion euros a year earlier as demand from emerging markets offset a declining car market in Europe.

Carrefour SA gained 5.9 percent to 18.36 euros. Cencosud SA, Chile’s biggest retailer by sales, agreed to buy Carrefour’s Colombian unit for 2 billion euros including debt.

U.S. stocks fell, giving benchmark indexes their biggest declines since June, as Microsoft Corp. (MSFT) and General Electric Co. (GE) results missed estimates and euro-area leaders failed to discuss aid for Spain at a summit.

U.S. stocks snapped a three-day rally yesterday after Google Inc. (GOOG)’s third-quarter earnings missed analysts’ estimates.

A European Union summit failed to discuss further financial assistance for Spain, according to French President Francois Hollande. Germany and France agreed to enforce common banking regulation for the euro area’s 6,000 lenders by the end of next year.

In the U.S., sales of previously owned homes held near a two-year high in September, restrained by a lack of supply that is pushing prices higher. Purchases of existing houses, tabulated when a contract closes, decreased 1.7 percent to a 4.75 million annual rate, matching the median forecast of economists, figures from the National Association of Realtors showed today in Washington.

All 10 industry groups in the S&P 500 declined today with indexes tracking technology, raw-materials producers and industrial stocks losing more than 1.7 percent.

McDonald’s had its largest drop since 2009, falling 4.5 percent to $88.72. The world’s largest restaurant chain by sales reported third-quarter profit fell 3.5 percent. Sales at U.S. stores open at least 13 months rose 1.2 percent in the quarter, marking the slowest growth in 11 quarters. Analysts projected an increase of 1.7 percent, according to 21 estimates compiled by Consensus Metrix.

At the close:

Dow 13,549 -8 -0.06%

Nasdaq 3,073 -31 -1.00%