Europe stocks drop on French downgrade, U.S. data

LONDON (MarketWatch) — European stocks fell sharply on Friday after solid U.S. jobs data stoked tapering fears, while stocks in France slumped after Standard & Poor's lowered the country's credit rating to AA from AA+.

The Stoxx Europe 600 index (XX:SXXP)  dropped 0.8% to 321.89, putting it on track for a 0.2% weekly loss.

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France's CAC 40 index (FR:PX1)  dropped 1.1% to 4,236.21, after the country lost its AA+ rating. Standard & Poor's raised concerns about the country's growth prospects, saying the government's reforms to taxation, as well as to labor and other markets, won't substantially raise the country's medium-term outlook. Adding to pressure on the French index, data showed the country's industrial production dropped 0.5% in September, missing expectations of a small rise.

Banks slid in Paris, with shares of Société Générale SA (FR:GLE)  down 3.2%, BNP Paribas SA (FR:BNP)  off 1.6%, and Credit Agricole SA (FR:ACA)  1% lower.

Shares of oil giant Total SA (FR:FP)   (TOT)  dropped 1.3%.

Associated Press Shares slide in Paris after S&P cuts France's credit rating.

Stock markets in Europe remained lower after data from the U.S. showed 204,000 new jobs were added to the economy in October, well above expectations. The unemployment rate rose to 7.3% from 7.2%.

Strong U.S. data strengthen the case for the Federal Reserve to scale back its $85-billion-a-month in bond buys. On Thursday, figures showing the U.S. economy grew by a better-than-expected 2.8% in the third quarter spooked investors and left markets in both Europe and the U.S. in the red.

ECONOMY AND POLITICS | @MKTWEconomics

U.S. economy adds 204,000 jobs
The U.S. economy added 204,000 jobs in October –— double Wall Street's forecast — despite a government shutdown that was expected to put a damper on hiring.
• 'Dectaper' back on table: payrolls reactions
• Temporary layoffs spike 448,000
• Job seekers pad resumes with credentials
/conga/story/misc/dc.html 286425

On the data front in Europe, Germany's trade surplus beat forecasts in September as exports rose for a second straight month. Germany's DAX 30 index (DX:DAX)  lost 0.5% to 9,036.52, retreating from an all-time closing high reached on Thursday.

Car stocks fell after Nomura cut the European auto and auto-parts sector to bearish from neutral.

"Unlike many investors, we do not see or forecast a sharp rebound in European car sales anytime soon," the analysts said. "With declining populations, wage deflation, rising unemployment, and continuing government deficits, we see no reason why European car demand should not be compared with Japan's 20-year declining car market as opposed to the V-shaped recovery in the U.S.," they added.

Shares of Daimler AG (DE:DAI)  dropped 1.8%, BMW AG (DE:BMW)  fell 0.5%, and Volkswagen AG (DE:VOW3)  gave up 0.8%.

Rheinmetall AG (DE:RHM)  slid 6.6% after the German weapons and car-parts maker reported a sharp decline in third-quarter profit amid restructuring expenses.

The U.K.'s FTSE 100 index (UK:UKX)  dropped 0.4% to 6,672.08.

Shares of International Consolidated Airlines Group SA (UK:IAG)  jumped 6% in London after the British Airways parent said profit more than doubled in the third quarter.

Rolls-Royce Holdings PLC (UK:RR)  climbed 2.8% after the aerospace and defense firm said its overall estimate for "good growth" in full-year underlying profit is unchanged from its previous forecast in July.

LPL tops breakaway brokers' bucket list

LPL Financial is the top destination for brokers who are thinking about leaving their firms within the next two years, according to a new survey by Cogent Research.

Nearly half the 326 potential breakaway brokers surveyed by Cogent said that they were highly likely to consider LPL, the second year in a row that it ranked first.

Last year, 43% of potential breakaways ranked it first.

INFOGRAPHIC: How the B-Ds stack up in adviser preference, AUM

Cogent defines potential breakaways as brokers who say that they are considering leaving their firm within the next two years.

Nearly one of four of the 1,749 brokers surveyed by Cogent said that they were considering leaving within that time frame.

The survey results come on the heels of an exceptionally strong third quarter of recruiting for LPL, which added 154 net new registered representatives and financial advisers during the period.

"LPL is living up to the promise of offering independent platforms, greater independence and superior operational support," said Meredith Rice, senior product director at Cogent.

Raymond James came in second with 44% of potential breakaways saying that they would strongly consider it, up from 40% last year.

Raymond James is ramping up its recruiting efforts now that its acquisition of Morgan Keegan & Co. Inc. is complete, chief executive Paul Reilly said during the company's latest earnings call.

Higher earning potential was the biggest draw for brokers, unsurprisingly, but this year, having greater control over the investment process was cited as a consideration by more potential breakaways — one-third, up from 25% a year ago.

That has played a part in why adviser satisfaction is lowest in the bank and wirehouse channels, where model portfolios are most used.

"Being independent means you can build portfolios the way you want to," said Tim Welsh, president of Nexus Strategy, a wealth management consulting firm.

"That's the real challenge when you have a massive institution like a wirehouse or big bank. They tend to manage to the lowest common denominator for compliance reasons," Mr. Welsh said.

"They don't want people doing all sorts of risky investing," he said. "They want to control that."

Wells Fargo Advisers placed third, ranking as the most desirable wirehouse for the second year in a row with 37% of potential breakaways giving it strong consideration, up from 26%! last year.

UBS Wealth Management, however, made the biggest leap in terms of perception. It ranked fourth among all companies with 29% of potential breakaways considering it, up from 26% in 2012.

Morgan Stanley Wealth Management and Merrill Lynch Wealth Management tied for fifth, with 28% of potential breakaways saying that they would strongly consider the two firms.

The two giants rank as the first- and second-largest wirehouses, even though they had shed some advisers over the one-year period that ended Sept. 30.

Morgan Stanley employed 16,517 advisers Sept. 30, down from 16,829, while Merrill Lynch has 15,624 advisers, down from 16,759 last year.

Officials at both wirehouses recently suggested that recruiting across the industry would slow down.