European Stock-Index Futures Climb; Repsol, Verbund, Commerzbank May Move
European stocks rebounded from a six-week low as Ireland’s government unveiled a four-year deficit-cutting plan and talks on a bailout of the country’s banks near conclusion.
Porsche SE climbed 6.3 percent after the carmaker’s operating profit increased more than sevenfold in the first quarter. Compass Group Plc rose 7.3 percent after reporting earnings that topped estimates. Bank of Ireland Plc dropped 11 percent amid speculation the Dublin-based lender may end up in majority state control.
The Stoxx Europe 600 Index climbed 1 percent to 266.29 at the 4:30 p.m. close in London. The gauge sank to the lowest level since Oct. 12 yesterday on mounting concern the sovereign- debt crisis will spread from Ireland to southern Europe and as North Korea fired artillery shells into South Korea.
“What’s going on regarding the peripheral European countries is impacting sentiment, but that is presenting valuation opportunities,” said Kevin Lilley, who helps oversee about $2 billion at Royal London Asset Management. “I am not comfortable with the short term volatility but I stick with the view that global GDP growth remains pretty robust. There is still substantial upside to equity markets.”
U.S. Labor Market
European stocks extended gains after a report showed applications for unemployment benefits in the U.S. fell more than forecast last week to the lowest level since July 2008, reinforcing evidence the labor market is healing.
National benchmark indexes climbed in 14 of the 18 western European markets. The U.K.’s FTSE 100 rallied 1.4 percent while France’s CAC 40 gained 0.6 percent. Ireland’s ISEQ rose 0.8 percent, rebounding from yesterday’s 3.4 percent selloff. Germany’s DAX led gains, rising 1.8 percent as a report showed the country’s business confidence unexpectedly surged to a record high.
The Irish government today announced plans to cut spending by about a fifth and raise taxes over the next four years in a bid to narrow the budget deficit to 3 percent of gross domestic product by the end of 2014. The shortfall will be 12 percent of GDP this year, or 32 percent including a banking rescue.
Cowen is racing to conclude talks with the European Union and the International Monetary Fund on an 85 billion-euro aid package as his governing coalition crumbles. The nation’s debt rating was lowered two steps by Standard & Poor’s late yesterday, with a negative outlook.
Porsche, Compass Gain
Porsche jumped 6.3 percent to 56.41 euros after the maker of the 911 sports car said earnings before interest and taxes surged to 395 million euros between August and October compared with 52 million euros a year earlier. Sales climbed 80 percent to 2.1 billion euros.
Compass rose 7.3 percent to 566 pence after the world’s largest catering company said full-year profit rose 15 percent, beating analysts’ estimates, as it exited some unprofitable contracts and cut costs at acquired businesses.
Provident Financial Plc, the U.K.’s biggest subprime lender, rallied 8.6 percent to 841.5 pence after saying the government’s spending cuts will have a “modest” effect on its customers.
BP Plc gained 1.9 percent to 437 pence after the company said it made a “significant’ gas discovery in Egypt’s West Nile Delta area.
Johnson Matthey Plc rose 2 percent to 1,877 pence after the maker of a third of all autocatalysts reported a 33 percent increase in first-half profit to 104.7 million pounds ($165 million) on improved demand from emerging markets. The company also said it expects results in the second half to be similar.
Bank of Ireland dropped 11 percent to 26.7 euro cents, extending this week’s slump to 41 percent. Two people familiar with the situation said the lender may end up in majority state control as the government injects more capital into the bank.
Ireland will seek to raise the core tier 1 capital levels of its banks to between 10.5 percent and 12 percent, the people said.
SAP AG slid 1 percent to 35.84 euros after the software maker was ordered to pay $1.3 billion to rival Oracle Corp. for copyright infringement by a now-defunct software maintenance unit. The jury yesterday awarded the damages after an 11-day trial in federal court in Oakland, California.
Agfa-Gevaert NV tumbled 18 percent to 3.47 euros after Europe’s largest maker of prepress products reported profit that missed analyst estimates as its specialty film business turned unprofitable.
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