European Stocks Advance; Peugeot, BASF Gain as Home Retail Sinks

European stocks advanced as companies from PSA Peugeot Citroen to BASF SE reported earnings that beat analysts’ estimates, offsetting declines in Home Retail Group Plc and Stada Arzneimittel AG.

Peugeot climbed 0.9 percent as the carmaker said quarterly revenue grew and raised its full-year outlook. BASF rose 2.6 percent after the world’s biggest chemicals maker said recovering markets helped lift its third-quarter profit beyond analysts’ estimates. Home Retail dropped 2.4 percent after reporting a decrease in first-half profit. Stada fell 3.7 percent as CA Cheuvreux cut its stance on the stock.

The Stoxx 600 Index added 0.3 percent to 266.13 as of 4:30 p.m. in London after swinging between gains and losses at least nine times. The Stoxx 600 has rallied 2.5 percent this month amid speculation that the policy makers at the U.S. Federal Reserve will announce another round of asset purchases at their November meeting in a bid to jumpstart economic growth.

“The outlook for 2011 is not brilliant, but is not bad either,” said Philipp Musil, who helps oversee about $10 billion at Semper Constantia Privatbank AG in Vienna. “I hope the market won’t be dissatisfied with the Fed’s quantitative easing program in November, but the market is still in good shape.”

Earnings Season

Of the 20 companies in the Stoxx 600 that have announced results since Oct. 7, 15 have beaten analyst estimates for per- share income, according to data compiled by Bloomberg. In the U.S., 62 of the 74 Standard & Poor’s 500 Index companies that have announced results this earnings season have topped predictions, the data show. Analysts predict 24 percent growth in third-quarter profit from a year earlier for S&P 500 companies, a fourth straight increase, Bloomberg data show.

National benchmark indexes increased in 15 of the 18 western European markets today. The U.K.’s FTSE 100 Index gained 0.4 percent and Germany’s DAX Index rose 0.5 percent. France’s CAC 40 Index increased 0.6 percent.

Novo Nordisk A/S, the world’s biggest insulin maker, surged 9.1 percent to 538 kroner, the largest jump since October 2008. The U.S. Food and Drug Administration yesterday said that Amylin Pharmaceuticals Inc., Eli Lilly & Co. and Alkermes Inc. must conduct a new study of their drug, delaying its debut by as much as 20 months.

Rio Tinto Group gained 2.7 percent to 4,056 pence, the first advance this week. The world’s third-largest mining company said it will spend $3.1 billion increasing the capacity of its iron ore infrastructure in the Pilbara region of Western Australia to 283 million metric tons by 2013. Rio made the announcement two days after abandoning a joint venture with BHP Billiton Ltd. to combine their Pilbara operations to save $10 billion.

Peugeot, BASF Rise

Peugeot added 0.9 percent to 27.66 euros. Third-quarter sales advanced to 13 billion euros ($18.2 billion) from 11.8 billion euros a year earlier, the Paris-based company said today. Analysts had predicted sales of 12.3 billion euros, the average of seven estimates compiled by Bloomberg.

BASF rose 2.6 percent to 51.93 euros after raising its full-year outlook, following third-quarter profit that beat analysts’ estimates. The company forecast 2010 sales of about 63 billion euros and earnings before interest and taxes and special items of more than 8 billion euros.

Stagecoach, National Express

Stagecoach Group Plc and National Express Group Plc surged 9.4 percent to 205.1 pence and 4.7 percent to 249.4 pence, respectively, as the U.K. government retained bus subsidies amid the country’s deepest-ever budget cuts.

FirstGroup Plc, which runs the Thameslink train service in London, increased 6.4 percent to 401.5 pence.

BIC SA gained 3.8 percent to 63.76 euros, its highest price since July 1998. The maker of ballpoint pens reported a 26 percent increase in third-quarter profit to 61.1 million euros, outpacing a 19 percent gain in sales.

Gamesa Corporacion Tecnologica SA gained 5.6 percent to 4.96 euros. Iberdrola SA, Spain’s biggest utility, said it will “probably” continue buying shares in wind turbine maker Gamesa. “We think the stock is cheap,” Chief Executive Officer Jose Ignacio Sanchez Galan said on a conference call after increasing the stake to 15.24 percent today.

Heidelberger Druckmaschinen AG soared 7.3 percent to 3.44 euros, the highest price in two weeks. The world’s largest maker of printing presses said second-quarter sales rose to 633 million euros from 499 million euros. The operating loss narrowed to 5 million euros to 10 million euros.

Waertsilae Gains

Waertsilae Oyj gained 6.6 percent to 49.17 euros as the Finnish maker of ship engines and power plants reported third- quarter net income of 101 million euros beating the 55.1 million-euro mean estimate of five analysts surveyed by Bloomberg.

United Internet AG advanced 4.7 percent to 12.40 euros. BofA Merrill Lynch Global Research reinstated coverage of the German Internet service provider with a “buy” recommendation.

Faurecia sank 5.3 percent to 18.50 euros as Europe’s largest maker of car interiors said One Equity Partners, a unit of JPMorgan, sold a 13 percent stake in the French company in a share placement at 18.20 euros apiece.

Home Retail lost 2.4 percent to 214.7 pence after it said in a statement today that first-half pretax profit declined 23 percent to 94.7 million pounds ($150 million) as cash-strapped consumers spent less on furniture and video games at its Argos unit and it offered discounts to drive sales.

Vestas Wind Systems A/S, the world’s largest maker of wind turbines, slumped 4.6 percent to 198.10 kroner. Hansen Transmissions International NV, a maker of wind-turbine gearboxes, plunged 14 percent to 43.5 pence after saying it expects sales to decline this fiscal year.

Stada Arzneimittel dropped 3.7 percent to 22.29 euros as Cheuvreux cut its recommendation on the German generic-drug maker to “underperform” from “outperform,” citing one-off charges in Serbia and slower growth in Germany.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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