European Stocks Gain as Earnings Outweigh ECB; AB InBev Advances
European stocks rose as better-than- estimated earnings from Anheuser-Busch InBev NV (ABI) to Adecco SA (ADEN) outweighed European Central Bank President Jean-Claude Trichet’s suggestions that the ECB may boost interest rates next month.
AB InBev, the brewer of Stella Artois and Bud Light, and Adecco, the world’s largest supplier of temporary workers, advanced more than 2 percent. British Sky Broadcasting Group Plc (BSY) gained 3 percent after News Corp. won approval to take full control of the company. Banco Santander SA (SAN) led banks lower as Trichet said “strong vigilance is warranted” and an “increase of interest rates in the next meeting is possible.”
The benchmark Stoxx Europe 600 Index rose 0.3 percent to 283.55 at the 4:30 p.m. close in London, rebounding from two days of losses. The gauge has climbed 2.8 percent this year amid better-than-estimated corporate earnings and indications the global economy is gathering strength.
The results season has showed “high profit margins and low leverage,” Jan Loeys, the New-York based chief market strategist at JPMorgan Chase & Co., wrote in a report today. “The bullish force of a zero return on cash, combined with fading medium-term uncertainties, remains in place and keeps us significantly long equities to bonds.”
The Stoxx 600 pared an earlier gain of as much as 1.1 percent after Trichet’s remarks. The ECB kept its key interest rate at a record low of 1 percent for a 23rd month today, as predicted by all 53 economists in a Bloomberg survey, as part of an effort to sooth the region’s fiscal woes.
‘Should Be Worried’
“Trichet thinks it is not his mandate to solve this crisis,” said Henrik Drusebjerg, a senior strategist at Nordea Investment Management, which oversees about $76 billion in Copenhagen. “He wants to put the responsibility on politicians, where he thinks it belongs. The market was expecting Trichet would keep interest rates low. You should be worried about banks -- and southern European ones in particular.”
Santander, Spain’s largest bank, fell 1.7 percent to 8.50 euros. UniCredit SpA (UCG), Italy’s biggest, dropped 1.5 percent to 1.80 euros and Banco Espirito Santo SA (BES), the largest publicly traded lender in Portugal, declined 0.8 percent to 3.22 euros.
European stocks were boosted by a U.S. report that showed initial jobless claims unexpectedly fell last week to the lowest level since May 2008. The data comes before tomorrow’s monthly jobs report, which is forecast to say payrolls rose by 195,000 workers in February after a 36,000 gain the previous month.
The Stoxx 600 has declined 2.6 percent since peaking at a 2 1/2-year high on Feb. 17 as opponents of Libya’s ruler Muammar Qaddafi took over large parts of the country, sending the price of oil soaring. Crude dropped for the first time in three days in New York today after Venezuela offered to mediate a resolution to the crisis.
AB InBev gained 2.3 percent to 41.11 euros. Fourth-quarter earnings before interest, taxes, depreciation and amortization, excluding some items, were $3.9 billion, beating the median estimate of six analysts surveyed by Bloomberg News for profit of $3.4 billion.
Adecco advanced 5.4 percent to 65 Swiss francs after reporting fourth-quarter net income of 141 million euros ($196 million). That exceeded the average analyst estimate of 115 million euros.
Fifty-six percent of Stoxx 600 companies that have announced earnings since Jan. 10 have beaten the average analyst estimate for per-share profit. The gauge is valued at about 13 times the reported earnings of its companies, close to the cheapest since March 2009, when the measure reached its lowest level in more than 12 years.
BSkyB climbed 3 percent to 823 pence, the highest price since 2002. Rupert Murdoch’s News Corp. won approval U.K. government for its 7.8 billion-pound ($12.7 billion) bid to take full control of the broadcaster after agreeing to spin off its Sky News channel into a new public limited company.
Rival U.K. media companies declined. Daily Mail and General Trust Plc, the publisher of the Daily Mail newspaper, slid 3.1 percent to 540 pence, the biggest drop since November. Broadcaster ITV Plc (ITV) fell 3.1 percent to 90.55 pence. Trinity Mirror Plc (TNI), which publishes the Daily Mirror, sank 22 percent to 66 pence even after full-year operating profit rose 17 percent.
Alcatel-Lucent led technology shares higher, surging 6.4 percent to 3.83 euros. There is speculation that an Chinese firm may make a bid for France’s largest telecommunications equipment maker, according to Jean-Michel Salvador, an analyst at AlphaValue in Paris. Alcatel spokeswoman Alix Cavallari declined to comment.
Ericsson AB, the world’s biggest maker of wireless phone networks, rallied 3.5 percent to 81.3 kronor after UBS AG upgraded its recommendation on the shares to “buy” from “neutral.”
Tullow Oil Plc (TLW) advanced 3.9 percent to 1,466 pence after saying its appraisal well in the Deepwater Tano licence off the coast of Ghana has successfully encountered oil in excellent quality sandstone reservoirs and confirming that the Owa-1 discovery is a “major light oil find.”
IMI jumped 6.6 percent to 943 pence. The world’s biggest maker of pneumatic controls said full-year net income rose to 224.7 million pounds from 130.2 million pounds. The company said its “optimistic” of making good progress in 2011.
Royal Ahold NV, the owner of Stop & Shop supermarkets, dropped 2.7 percent to 9.44 euros as fourth-quarter profit missed analysts’ estimates.
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