European stocks close

European stocks dropped from a five-year high as Federal Reserve Bank of St. Louis President James Bullard said the central bank may decide to reduce bond purchases at its next policy meeting.

The Stoxx Europe 600 Index slipped 0.3 percent to 314.27 at 4:30 p.m. in London after earlier climbing as much as 0.2 percent. The equity benchmark has still risen 0.9 percent this week, extending its rally so far this year to 12 percent, as the Fed refrained from slowing the pace of its bond-buying program at its last policy meeting on Sept. 17-18.

In Germany, an INSA opinion poll published yesterday showed the opposition Social Democrats climbing one percentage point to 28 percent, 10 points behind Chancellor Angela Merkel’s Christian Democratic Union and its sister party the Christian Social Union of Bavaria. Both main groups fell short of a majority with their preferred coalition partners in the survey.

Some polls show the Free Democrats, the junior member of the governing coalition, struggling to reach the 5 percent threshold they need to enter parliament, meaning that Merkel may have to form a government with another party.

National benchmark indexes fell in 10 of the 18 western-European markets. The U.K.’s FTSE 100 slid 0.4 percent and Germany’s DAX slipped 0.2 percent. France’s CAC 40 Index added 0.1 percent.

Adidas slipped 2.9 percent to 80.23 euros after cutting the low end of its profit forecast for 2013 by 7.9 percent. The world’s second-largest sporting-goods maker said the euro’s strength would hurt its sales in the third quarter, while the move to a new distribution center in Russia would reduce the availability of products in shops.

Direct Line dropped 3.2 percent to 211 pence after RBS sold 300 million shares of the insurance company for 210 pence apiece. The bank, which is majority owned by the U.K. government, reduced its holding in Direct Line by 20 percent to 28.5 percent. RBS slipped 1.4 percent to 363.7 pence.

RWE AG retreated 3.9 percent to 24.70 euros after Germany’s second-largest utility said it will reduce its dividend. The company will pay 1 euro ($1.35) on each common and preferred share at its annual general meeting in 2014, half of what it paid this year.