European Stocks Close Little Changed; Volvo, Kazakhmys Drop, Renault Gains
Stock Chart for Renault SA (RNO)
European stocks closed little changed as a record drop in U.K. house prices offset an unexpected decrease in initial claims for U.S. jobless benefits.
Volvo AB fell 5.3 percent and Renault SA surged 8.5 percent as France’s second-largest carmaker sold a 14.9 percent stake in the Swedish truckmaker. Kazakhmys Plc, Kazakhstan’s biggest copper company, retreated 5.6 percent as an investor sold shares. Man Group Plc, Actelion Ltd. and Demag Cranes AG soared more than 5 percent amid takeover speculation.
The Stoxx Europe 600 Index slipped less than 0.1 percent to 262.31 at the 4:30 p.m. close in London. The gauge rallied 6.7 percent in the third quarter as concern eased that a slowing pace of economic growth in China and the U.S. would curb corporate profits. The index has climbed 3.3 percent this year.
“The market has consolidated gains after performing really well,” said Nicola Trivelli, who helps manage about $4.2 billion as chief investment officer of Sella Gestioni Sgr in Milan. “Looking at the earnings season, the positive is that consensus expectations have been revised lowed, reducing the impact of negative surprises. However, the focus will be on the outlook for the fourth quarter.”
Alcoa Inc., the biggest U.S. aluminum producer, will become the first company in the Dow Jones Industrial Average to report third-quarter results after the close of U.S. trading today.
U.K. House Prices
National benchmark indexes advanced in 13 of the 18 western European markets. Germany’s DAX rose 0.1 percent and France’s CAC 40 gained 0.2 percent. The U.K.’s FTSE 100 dropped 0.3 percent as house prices plunged the most since at least 1983 in September. The average cost of a British home fell 3.6 percent from August, according to Halifax, the mortgage lending division of Lloyds Banking Group Plc.
In the U.S., Labor Department figures showed applications for unemployment benefits fell last week to the lowest in three months, indicating companies are slowing the pace of firings.
The European Central Bank and the Bank of England kept their benchmark interest rates at record lows today, as forecast by all economists surveyed by Bloomberg.
Volvo declined 5.3 percent to 91.9 kronor after Renault sold a 14.9 percent stake for 3 billion euros ($4.2 billion) to take advantage of a surge in the truckmaker’s shares to pay down debt. The carmaker said it sold 302.9 million Class B shares in a private placement at 93 kronor each.
Renault rallied 8.5 percent to 39.60 euros, leading a gauge of automakers in the Stoxx 600 to the biggest gain among 19 industry groups.
Kazakhmys slid 5.6 percent to 1,400 pence. Orleans Trade & Investment Corp. sold 9.35 million shares, or a 1.75 percent stake in the mining company, according to terms of the transaction obtained by Bloomberg News.
Gamesa Corporacion Tecnologica SA dropped 5.4 percent to 5.11 euros. The Spanish wind turbine maker, which in July forecast about 2.5 gigawatts of turbine sales this year, said it so far has orders for 791 megawatts of turbines in 2011.
Halfords Plc tumbled 8.7 percent to 408 pence for the biggest decline in the Stoxx 600. The U.K.’s largest retailer of car parts and bicycles said same-store sales fell 4.1 percent in the first half.
HeidelbergCement AG, the world’s third-largest cement maker, tumbled 4.7 percent to 35.40 euros, leading a gauge of construction shares lower. Lafarge SA, the biggest cement maker, sank 4.6 percent to 41.38 euros.
“The market is a bit nervous about negative pricing in the U.S.” following comments at an industry conference today, Tim Cahill, an analyst at Davy Stockbrokers, said in an interview.
Petropavlovsk Plc, Russia’s third-largest gold producer, retreated 5.8 percent to 1,071 pence after the Financial Times’s Alphaville blog said analysts may lower their production forecasts for the company.
Man Group, the hedge-fund manager that’s buying GLG Partners Inc., rallied 5.1 percent to 249.8 pence on speculation that an unidentified U.S. bank may make an offer for the firm.
“There is vague talk a U.S. bank may be interested in bidding for them,” said Manoj Ladwa, a London-based senior trader at ETX Capital. “The stock has been performing very well over the last few days and it is backed up by volumes.”
Man Group spokesman George Trefgarne declined to comment.
Actelion surged 5 percent to 44.7 Swiss francs amid speculation Bristol-Myers Squibb Co. was buying shares and may make a takeover offer. The Financial Times, citing “market rumors,” reported today that Bristol-Myers was buying Actelion shares and would raise its stake above the 3 percent level that would require the New York-based company to publicly announce its holdings.
Demag Cranes soared 6.2 percent to 31.49 euros as the Financial Times Deutschland reported that Konecranes Oyj of Finland is considering a takeover bid for the German company, without saying where it got the information. Konecranes has hired advisers to assist with the proposal, and has organized financing, the newspaper said. Spokesmen for both companies declined to comment, the newspaper added.
‘Plenty of Cash’
“There is no doubt that M&A is picking up,” Max King, a London-based investment strategist at Investec Asset Management, which oversees about $55 billion, said on Bloomberg Radio. “Companies have strong balance sheets, they’ve got plenty of cash, strong cash flow, and they are looking to do something with the money. The obvious thing to do with the money is to make acquisitions, especially when cash is generating a zero interest rate at the bank.”
Marks & Spencer Group Plc, the U.K.’s largest clothing retailer, rallied 4.9 percent to 410 pence after reporting second-quarter sales growth that beat analysts’ estimates as the company won market share in clothing.
Swiss Reinsurance Co., the world’s second-largest reinsurer, rose 3.7 percent to 45.11 francs on speculation that Standard & Poor’s Ratings Services may review the company’s credit rating.
“One explanation of the share increase could be speculation that S&P is planning to review Swiss Re’s rating,” said Roland Pfaender, an analyst with Commerzbank AG in Frankfurt.
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