European Stocks Rally on Apple, Fiat Earnings
Apple Inc. CEO Steve Jobs laughs as he talks about the Apple iPhone 4 at a news conference. Photographer: Tony Avelar/Bloomberg
July 21 (Bloomberg) -- Philip Orlando, chief equity market strategist at Federated Investors Inc., talks with Bloomberg's Susan Li about his investment strategy for global stocks. Orlando, speaking from New York, also discusses the outlook for the U.S. economy and stock market. (Source: Bloomberg)
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European stocks climbed the most in a week as companies from Apple Inc. to Fiat SpA and Accor SA reported better-than-estimated results and Reckitt Benckiser Group Plc agreed to buy SSL International Plc.
ARM Holdings Plc rallied 2.5 percent after Apple posted a 78 percent surge in third-quarter profit. Fiat rose more than 6 percent after the carmaker’s trading earnings topped analysts’ forecasts. Accor soared 5.6 percent after sales at Europe’s largest hotel company beat estimates. SSL jumped 33 percent after Reckitt Benckiser agreed to buy the condom maker for 2.5 billion pounds ($3.83 billion).
The Stoxx Europe 600 Index rose 1.2 percent to 249.24 at the 4:30 p.m. close in London, the biggest gain since July 13. The gauge is still down 8.4 percent from this year’s high on April 15 on concern about the strength of the global economic recovery as indebted European governments slash spending.
“We’ve got a war of attrition going on between the non- believers who are focused on economic data and others who say if companies are doing well I want to be a part of it,” said David Buik, a London-based market strategist at BGC Partners. “We’ve also had good earnings out of the U.S. Investors are today deciding it’s better to own it than not.”
National benchmarks climbed in 15 of the 18 western European markets. The U.K.’s FTSE 100 gained 1.5 percent, France’s CAC 40 increased 0.8 percent and Germany’s DAX rose 0.4 percent.
ARM Advances
ARM, the U.K. designer of semiconductors used in Apple’s iPhone, gained 2.5 percent to 308 pence as the U.S. company forecast fourth-quarter sales that topped analyst estimates and posted third-quarter revenue and profit that beat predictions.
Morgan Stanley and Wells Fargo & Co. also reported earnings that exceeded analysts’ estimates. Of the 75 companies in the Standard & Poor’s 500 Index that have reported results since July 12, all but 12 beat their per-share profit forecasts, Bloomberg data show.
Fiat rallied 6.7 percent to 9.67 euros after Italy’s biggest automaker returned to profit in the second quarter on higher sales of trucks and agricultural machines and said it may raise its forecast later this year.
Earnings before interest, taxes and one-time gains or losses, which Fiat calls trading profit, more than doubled to 651 million euros ($840 million), beating the 359 million-euro average analyst estimate in a Bloomberg survey. Net income was 90 million euros, compared with a 168 million-euro loss a year earlier.
Accor, SSL
Accor climbed 5.6 percent to 24.49 euros after first-half sales rose 6 percent to 2.85 billion euros. Excluding the services unit, which was spun off this month, second-quarter revenue increased to 1.72 billion euros from 1.57 billion euros a year earlier, beating the 1.64 billion-euro average estimate from four analysts surveyed by Bloomberg.
SSL jumped 33 percent to 1,177 pence after Reckitt Benckiser offered to buy the maker of Durex condoms and Scholl shoes for 1,163 pence a share. SSL shareholders will also be entitled to a proposed final dividend of 8 pence a share. Reckitt advanced 3.5 percent to 3,300 pence.
BHP Billiton Ltd. gained 2.5 percent to 1,918.5 pence as the world’s largest mining company said fourth-quarter iron ore production rose to 31.2 million metric tons, driven by expansions at its Australian mines and surging global steel demand.
BP Gains
BP Plc climbed 3.2 percent to 399.9 pence after the company battling a record oil spill in the Gulf of Mexico agreed to sell assets in North America and Egypt to Apache Corp. for $7 billion as part of its plan to raise cash to fund liabilities.
Separately, the London-based Times reported that Robert Dudley is the front-runner to replace Chief Executive Officer Tony Hayward, who is set to step down in the next 10 weeks. The newspaper cited unnamed people close to the company. Hayward has the full support of the board and will stay in office, a BP spokesman said.
Marine Harvest ASA jumped 10 percent to 4.76 kroner for the second-best performance in the Stoxx 600. The world’s biggest salmon farmer rallied after declaring a first-half dividend for the first time.
Svenska Cellulosa AB rallied 7.5 percent to 102.4 kronor, the most in more than a year, after Europe’s largest tissue maker reported second-quarter profit that beat analysts’ estimates on lower production costs.
Roche Retreats
Roche Holding AG sank 4.2 percent to 137 Swiss francs, the biggest drop since April 2009, after scientific advisers to the Food and Drug Administration voted 12-1 to rescind Avastin’s clearance in breast cancer.
The panel found that the drug paired with chemotherapies didn’t work better than other medicines alone. The agency usually follows panels’ advice, though it isn’t required to do so. Roche said it will continue to discuss data with the FDA.
Smith & Nephew Plc, Europe’s largest maker of shoulder and knee implants, dropped 4.5 percent to 560.5 pence after Citigroup Inc. sold 8 million shares for an institutional investor. The shares were placed at 559 pence apiece, according to terms of the deal obtained by Bloomberg News.
Ocado Group Plc, the unprofitable U.K. online grocer, sank 7.2 percent to 167 pence on the first day of conditional trading in London after skepticism over the valuation led the company to reduce the price for its initial public offering.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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