European Stocks Rise as Better-Than-Expected Earnings Outweigh Debt Crisis
European stocks rebounded from a six-week low as better-than-estimated earnings reports overshadowed concern that Greece’s credit crisis will spread through the euro region.
Banco Santander SA rallied 4 percent after the biggest Spanish bank posted profit that topped analyst projections. Pernod Ricard SA gained 1.9 percent after the distiller raised its earnings forecasts. National Bank of Greece SA soared 18 percent amid optimism Greek aid talks will conclude this week.
The benchmark Stoxx Europe 600 Index rose 1.4 percent to 261.74 at 4:56 p.m. in London. The gauge closed at the lowest level since March 15 yesterday after Standard & Poor’s cut Spain’s credit rating, one day after downgrading Greek and Portuguese debt.
“Sovereign debt concerns are being offset by strong corporate numbers,” said Manoj Ladwa, a London-based senior trader at ETX Capital. “Investors are focusing on which country will be next to be downgraded.”
Nouriel Roubini, the New York University professor who forecast the U.S. recession more than a year before it began, yesterday warned sovereign debt from the U.S. to Japan and Greece will lead to higher inflation or government defaults.
Almost $1 trillion of worldwide equity value was erased April 27 on concern that debt will spur defaults, prompting German Chancellor Angela Merkel and the International Monetary Fund to step up efforts to overcome the Greek fiscal crisis.
National benchmark indexes rebounded today, climbing in all 18 western European markets except Iceland. Germany’s DAX rose 1 percent, France’s CAC climbed 1.4 percent and the U.K.’s FTSE 100 increased 0.6 percent. In Greece, the benchmark ASE Index soared 7.1 percent.
Of the companies on the Stoxx 600 that have reported earnings since April 12, about 70 percent have beaten analysts’ estimates, according to data compiled by Bloomberg. In the U.S., almost 80 percent of S&P 500 companies have topped projections.
Shares of Santander rallied 4 percent to 9.461 euros after the Spanish bank posted a 5.7 percent increase in first-quarter profit to 2.22 billion euros as growth in Brazil and the U.K. countered a slump at home. The median estimate in a survey of nine analysts was 2.11 billion euros.
Pernod Ricard climbed 1.9 percent to 64.18 euros after the maker of Absolut vodka raised its forecast for full-year earnings after demand for premium cognac in China helped the distiller beat analysts’ estimates for sales.
Profit from recurring operations will rise by about 3 percent this year, more than a previous forecast of 1 percent to 3 percent. Revenue excluding duties and taxes rose to 1.54 billion euros in the three months through March, beating analyst estimates of 1.43 billion euros.
National Bank of Greece, the nation’s biggest lender, soared 18 percent to 12 euros, while EFG Eurobank Ergasias SA, the second-largest, rallied 14 percent to 6.07 euros. Alpha Bank SA climbed 10 percent to 5.95 euros.
European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels today that he is confident discussions on the aid package for Greece will conclude “in the next days.”
“The financial support will give Greece sufficient breathing space from pressure of financial markets,” he said. Details on the aid package would be available “soon.” German Chancellor Angela Merkel also said the results of talks with Greece over an aid package can be expected “in a few days.”
Unilever gained 3.3 percent to 1,980 pence in London after the world’s second-largest food and detergent company reported a 33 percent increase in first-quarter profit to 973 million euros as lower prices spurred shoppers to buy more Dove soap and Lipton tea. That beat the average analyst estimates of 909 million euros in a Bloomberg survey. Sales rose 6.7 percent to 10.1 billion euros.
Repsol YPF SA climbed 4.1 percent to 17.545 euros after Spain’s biggest oil company said production at its upstream division will increase 3 to 4 percent a year through 2014 as it develops projects from Brazil to Algeria. Repsol plans to invest 28.5 billion euros over the period.
Standard Life Plc gained 4.4 percent to 202 pence after Scotland’s biggest insurer reported a 30 percent rise in first- quarter revenue to 4.65 billion pounds ($7.1 billion) on higher sales of long-term savings products to U.K. companies. That beat the 3.83 billion-pound median estimate of three analysts surveyed by Bloomberg.
British Sky Broadcasting Group Plc climbed 4.9 percent to 625 pence after the U.K.’s biggest pay-television provider said third-quarter operating profit rose 3 percent to 244 million pounds as it added subscribers to its high-definition TV service.
BP Plc, which vies with Royal Dutch Shell Plc for the title of Europe’s biggest oil company, sank 6.5 percent to 584.2 pence, on course for the biggest slump since 2008. One of BP’s oil wells in the Gulf of Mexico is leaking as many as 5,000 barrels of crude a day, five times more than previous estimates, the U.S. Coast Guard said.
To contact the reporter on this story: Sarah Jones in London at firstname.lastname@example.org.