European stocks rebounded from a 2 1/2-month low after six days of losses pushed valuations to near the cheapest in two years, the U.S. trade deficit narrowed and traders pared bets on the pace of interest-rate increases.
Syngenta AG (SYNN) and Yara International ASA (YAR) rose more than 1.5 percent as corn jumped to the highest in almost three years after the U.S. Department of Agriculture forecast tighter supplies. BASF AG, Europe’s largest chemicals maker, climbed 2.8 percent. Home Retail Group Plc (HOME) plunged the most on record after sales at its Argos chain fell.
The Stoxx Europe 600 Index advanced 1 percent to 271.76 at the 4:30 p.m. close in London as all 19 industry groups gained. The measure has fallen 6.7 percent from this year’s high on Feb. 17 and is trading at about 12.9 times its companies’ reported earnings, near the cheapest valuation since 2008, according to data compiled by Bloomberg.
The U.S. trade deficit unexpectedly narrowed in April, reflecting a plunge in auto and oil imports combined with record exports. The gap shrank 6.7 percent to $43.7 billion, the lowest since December, figures from the Commerce Department showed.
National benchmark indexes gained in all 18 western European markets, except Iceland. The U.K.’s FTSE 100 Index rose 0.8 percent, France’s CAC 40 climbed 1.1 percent and Germany’s DAX advanced 1.4 percent.
The European Central Bank kept its benchmark interest rate at 1.25 percent today, while the Bank of England held its key rate at 0.5 percent and left its bond-purchase program unchanged at 200 billion pounds ($328 billion).
The euro weakened and German government bonds fell as ECB President Jean-Claude Trichet said the bank hasn’t raised its 2012 inflation forecast from 1.7 percent, fueling speculation it won’t increase rates as quickly as previously expected.
Syngenta, the biggest maker of crop protection chemicals, gained 2 percent to 285.9 Swiss francs and Yara, the largest maker of nitrogen fertilizers, jumped 1.9 percent to 335.1 kroner. BASF rose 2.8 percent to 64 euros.
Corn futures climbed on the Chicago Board of Trade as the USDA said U.S. stockpiles before the start of the 2012 harvest may fall to 695 million bushels, the lowest since 1996.
Elekta AB (EKTAB) rallied 3.9 percent to 268.5 kronor as the maker of radiation-treatment equipment said fourth-quarter net income rose to 531 million kronor ($86 million) from 476 million kronor a year earlier. Analysts had estimated profit of 522 million kronor, according to a survey compiled by Bloomberg.
Suez Environnement SA (SEV) advanced 2.1 percent to 14.29 euros as JPMorgan Chase & Co. upgraded Europe’s second-largest water company to “overweight” from “neutral.” Fortum Oyj (FUM1V), Finland’s biggest utility, rose 3.4 percent to 23.14 euros after HSBC Holdings Plc increased its recommendation to “overweight” from “neutral.”
Elan Corp. jumped 5.7 percent to 7.18 euros for the biggest gain the Stoxx 600. The Irish drugmaker was raised to “buy” from “neutral” at UBS AG.
Club Mediterranee SA surged 5.1 percent to 16.14 euros. The French holiday resort operator said first-half net income rose to 10 million euros ($14.6 million) from 3 million euros.
Home Retail tumbled 14 percent to 174.5 pence, the biggest drop since it split from GUS Plc in October 2006. The retailer said revenue at Argos stores open at least a year fell 9.6 percent in the 13 weeks ended May 28. Shore Capital analyst Ramona Tipnis had estimated a 4 percent drop.
Dixons Retail Plc (DXNS), Europe’s largest electronics retailer, plunged 8.9 percent to 17.58 pence. Moody’s Investors Service downgraded the company’s long-term ratings to B1 from Ba3.
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