European Stocks Climb to 2 1/2-Year High; Heineken, SocGen Surge
European stocks rose for a fourth day, pushing the Stoxx Europe 600 Index to a 2 1/2-year high, as earnings from Heineken NV and Societe Generale SA beat estimates and U.S. housing starts topped forecasts.
Heineken, the world’s third-largest brewer, and Societe Generale, France’s second-biggest lender, rallied more than 3 percent. Sanofi-Aventis SA climbed 3.5 percent after agreeing to buy Genzyme Corp. for at least $20.1 billion. Clariant AG sank the most in eight years after saying it will acquire Sued-Chemie AG in a deal valued at 2 billion euros ($2.7 billion).
The benchmark Stoxx 600 rose 0.4 percent to 290.72 at the 4:30 p.m. close in London, the highest since August 2008. The gauge has climbed 5.4 percent this year amid speculation the economic recovery is accelerating and that policies to support indebted countries using the euro will be successful. The rally has pushed the measure to about 15.5 times the reported profits of its companies, near the highest valuation in nine months, according to data compiled by Bloomberg.
“2011 is going to be a good year for equities,” said Robert Halver, head of research at Baader Bank AG in Frankfurt. “The big economic framework is very fine and earnings are good. I see no clear end of the rally.”
National benchmark indexes climbed in 15 of the 18 western European markets. The U.K.’s FTSE 100 increased 0.8 percent and Germany’s DAX added 0.2 percent, while France’s CAC 40 advanced 1 percent.
About 73 percent of the 371 companies in the Standard & Poor’s 500 Index that have reported results since Jan. 10 topped per-share earnings projections, according to data compiled by Bloomberg. In Europe, 55 percent beat forecasts.
Commerce Department figures released today showed U.S. builders began work on more homes than forecast in January. Housing starts climbed 15 percent to a 596,000 annual rate, the most this year.
In the U.K., the Bank of England raised its assessment of the risk that inflation won’t return to its 2 percent target in two years, saying the outlook may be a affected by higher commodity prices and an increase in consumer-price expectations.
Heineken advanced 3.1 percent to 38.04 euros after the brewer reported full-year earnings before interest and taxation, excluding one-time items, of 2.61 billion euros. The median estimate of analysts surveyed by Bloomberg News was for profit of 2.5 billion euros.
Societe Generale surged 4.9 percent to 51.24 euros, helping a measure of banks to the biggest increase among 19 industry groups in the Stoxx 600. Fourth-quarter net income quadrupled to 874 million euros, boosted by a turnaround at its Russian unit and on fewer writedowns at the corporate and investment bank. That beat the 865 million-euro average estimate of 12 analysts surveyed by Bloomberg.
Sanofi gained 3.5 percent to 51.55 euros, the largest advance in a month. France’s biggest drugmaker agreed to buy Genzyme for at least $20.1 billion, ending a nine-month pursuit of the U.S. biotechnology company.
Eiffage SA surged 6.9 percent to 40.67 euros for the best performance in the Stoxx 600 as Exane BNP Paribas upgraded France’s third-largest construction company to “outperform” from “neutral.”
Siemens AG climbed 2.2 percent to 96.90 euros, a three-year high, as Barclays Plc initiated coverage of Europe’s biggest engineering company with an “overweight” recommendation.
Clariant plunged 13 percent to 15.15 Swiss francs, the biggest drop since February 2003. The world’s largest maker of printing-ink chemicals agreed to buy private equity-owned Sued- Chemie to expand in chemical catalysts used in the oil and automotive industries.
“We are surprised a little by the timing and view the exit multiples as full,” said James Knight, an analyst at Barclays.
Deutsche Boerse AG, which is buying NYSE Euronext to create the world’s largest operator of stock and derivatives exchanges, slipped 1.7 percent to 58.84 euros after reporting a net loss for the three months ended Dec. 31 of 61.2 million euros.
Daimler AG, the world’s second-largest maker of luxury vehicles, slid 4.4 percent to 53.54 euros after earnings before interest and taxes missed analysts’ estimates. The company had profit of 7.27 billion euros from a loss of 1.51 billion euros a year earlier. The average estimate in a Bloomberg survey of analysts was 7.64 billion euros.