European stock close

European stocks dropped the most in more than five weeks as better-than-forecast U.S. jobless claims fueled speculation the Federal Reserve will taper its bond-buying program this year.

The Stoxx Europe 600 Index slid 1.1 percent to 305.24 at 4:30 p.m. in London, its largest drop since July 5. The equity benchmark yesterday rose to its highest level since May 22 as the euro area’s economy returned to growth in the three months through June after six quarters of contraction. It has still rallied 11 percent from a low on June 24.

In the U.S., a Labor Department report showed fewer Americans applied for unemployment benefits last week. Jobless claims (INJCJC) in the week ended Aug. 10 fell to 320,000 from a revised 335,000 a week earlier. The median forecast of economists had called for a reading of 335,000.

A Fed report showed that output from U.S. factories, mines and utilities was unchanged in July, after gaining a revised 0.2 percent in June. The median estimate of economists surveyed had called for a 0.3 percent increase.

A separate release showed manufacturing expanded at a slower pace in the New York region in August. The Fed Bank of New York’s general economic index slipped to 8.2 from 9.5 in July. Readings greater than zero mean activity expanded in New York, northern New Jersey and southern Connecticut.

National benchmark indexes declined in all 14 western-European markets that opened today.

FTSE 100 6,483.34 -104.09 -1.58% CAC 40 4,093.2 -21.00 -0.51% DAX 8,376.29 -61.83 -0.73%

Zurich Insurance declined 3.6 percent to 243 Swiss francs after posting second-quarter net income of $789 million. That missed the $823.8 million average projection of analysts in a Bloomberg survey. The insurer said the floods in central Europe in May and June cost it $140 million.

H&M lost 1.6 percent to 242 kronor after saying same-store sales fell 1 percent in July from the same month a year earlier. The average estimate in an SME Direkt survey of analysts had called for an increase of 0.8 percent.

BG Group declined 2.5 percent to 1,176.5 pence as the Egyptian army continued its campaign to break up demonstrations against the removal of the country’s president. On July 26, Chief Executive Officer Chris Finlayson said “events in Egypt remain a primary concern and will continue to be so as the political, social and business environment evolves.

AstraZeneca (AZN) Plc dropped 1.7 percent to 3,192.5 pence and GlaxoSmithKline (GSK) Plc lost 1.4 percent to 1,657.5 pence as Morgan Stanley lowered its recommendation on both drugmakers to underweight, the equivalent of sell, from equal weight.

Oriflame Cosmetics SA slid 6.6 percent to 202.30 kronor, the lowest price this year, after reporting earnings before interest, taxes, depreciation and amortization of 42.2 million euros ($56 million) and sales of 360 million euros in the second quarter. Analysts on average had forecast Ebitda of 46.7 million euros and revenue of 367 million euros for the period.

Imperial Tobacco Group Plc climbed 2.6 percent to 2,209 pence as Europe’s second-biggest tobacco company said it plans to introduce an alternative to cigarettes next year. The product will provide a different way of taking nicotine.