European Stocks Advance; Standard Chartered Rises, TomTom Slides
European stocks gained as investors speculated that Greek lawmakers will heed Prime Minister George Papandreou’s call to approve a package of austerity measures.
Standard Chartered Plc (STAN) rose 2.7 percent after the U.K.’s third-largest bank by market value said first-half profit before taxes may post “double-digit” growth from a year earlier. Prudential Plc (PRU) climbed 2.6 percent after Goldman Sachs Group Inc. (GS) upgraded the U.K.’s largest insurer to “buy.” TomTom NV plunged 27 percent after cutting full-year profit and sales forecasts as U.S. demand for its devices declined.
The benchmark Stoxx Europe 600 Index increased 0.5 percent to 265.23 at the 4:30 p.m. close in London. Since its peak this year on Feb. 17, the gauge has tumbled 8.9 percent as investors speculated that Greece will fail to repay all its debt. The retreat has left the measure trading at the cheapest valuation compared with reported profits since 2008, according to data compiled by Bloomberg.
“Without Europe’s debt crisis, the environment is positive for equities,” said Thilo Mueller, who helps manage 120 million euros ($172 million) at MB Fund Advisory GmbH in Limburg, Germany. “Equities are cheap and economic data and company’s earnings are good. If the Greek parliament votes for austerity measures, this will help ease concern in the market.”
National benchmark indexes gained in all of the western European markets except Iceland and Belgium. The U.K.’s FTSE 100 Index advanced 0.8 percent. France’s CAC 40 Index (CAC) climbed 1.5 percent, while Germany’s DAX Index added 0.9 percent.
Greece’s Austerity Vote
Papandreou faces his second survival test in a week tomorrow when lawmakers vote on the package of budget cuts and asset sales that’s needed before Greece can get the fifth loan payment from last year’s 110 billion-euro rescue. Failure to pass Papandreou’s 78 billion-euro plan may lead to the euro area’s first sovereign-debt default.
The first session of the three-day debate began in Athens yesterday. The Greek parliament will vote on June 29. Lawmakers also need to pass an implementation law, which provides the technical details of how the five-year plan will be applied, by June 30. Unions began their fourth general strike of the year at midnight, protesting against the plan.
Greece’s ASE Index rose 2.7 percent today as Alpha Bank SA surged 4.3 percent to 3.42 euros and National Bank of Greece SA (ETE), the country’s largest lender, soared 5.4 percent to 4.90 euros. EFG Eurobank Ergasias rallied 5.8 percent to 3.26 euros.
European Central Bank Executive Board member Juergen Stark said he does not expect the international community to finance Greece further after July if the country fails to implement its austerity plan, Die Welt reported citing an interview.
HSBC Holdings Plc Chief Executive Officer Stuart Gulliver said the bank and other lenders have discussed Greece’s debt payments with the Institute of International Finance.
“There appears to be an emerging consensus that agreement is a week or two away,” the CEO said on the sidelines of a conference in London today.
In the U.S., house prices decreased in April, showing that the housing market remains an obstacle to the economic recovery. The S&P/Case-Shiller index of property values in 20 cities fell 4 percent from April 2010, the biggest year-on-year drop since November 2009. That matched the median forecast of 30 economists surveyed by Bloomberg News. Another report showed that consumer confidence dropped to a seven-month low in June.
Standard Chartered gained 2.7 percent to 1,581 pence after the London-based bank said income from markets including Hong Kong, Singapore and China helped offset a decline in India and “muted” growth in Africa. Net interest margins, a measure of profitability for its lending businesses, were “broadly flat” for the group from the previous full year.
Banking shares were the second-best performers in the Stoxx 600 (SXXP) today. UBS AG (UBSN) and Credit Suisse AG, which Sanford C. Bernstein & Co. named as two of its preferred stocks, rose 2.4 percent to 14.77 Swiss francs and 0.8 percent to 31.88 francs, respectively.
Prudential increased 2.6 percent to 705.5 pence after the insurer was raised to “buy” from “neutral” at Goldman Sachs. The brokerage also upgraded Legal & General Group Plc (LGEN), the U.K.’s fourth-biggest insurer by market value, and St. James’s Place Plc, the wealth manager majority-owned by Lloyds Banking Group Plc. Legal & General rose 1.3 percent to 111 pence and St. James’s Place advanced 0.6 percent to 321 pence.
Adidas AG (ADS), the world’s second-largest sporting-goods maker, jumped 3.9 percent to 53.78 euros after Nike Inc. (NKE), the world’s largest sporting-goods company, posted fourth-quarter per-share earnings of $1.24. Analysts had predicted $1.17, according to the average estimate in a Bloomberg survey.
Puma AG, the sporting-goods brand known for its leaping cat logo, increased 2.6 percent to 210.35 euros.
Carrefour SA (CA) advanced 3.7 percent to 27.44 euros. The world’s second-largest retailer by sales said it had received a proposal from the Gama investment fund to merge its Brazilian assets with those of Cia. Brasileira de Distribuicao Grupo Pao de Acucar. The company’s board will review the proposal, which would create Brazil’s largest retailer, according to a statement.
Casino Guichard-Perrachon SA sank 5.6 percent to 62.20 euros, its lowest price in 11 months. The rival French supermarket operator, which owns 37 percent of Pao de Acucar, said Gama’s proposal to Carrefour is a “long-standing illegal planned financial transaction.”
K+S AG, Europe’s biggest potash producer, gained 2 percent to 52.22 euros after Goldman Sachs Group Inc. raised its potash price forecasts for the last half of 2011 and 2012 by 6 to 9 percent.
TomTom (TOM2) slumped 27 percent to 3.58 euros, its largest retreat in more than six years, after Europe’s biggest maker of portable navigation devices said earnings per share will be 25 euro cents to 30 cents in 2011. In April, the company predicted “broadly flat” earnings per share compared with 49 cents in 2010. Full-year sales will be 1.23 billion euros to 1.28 billion euros, about 14 percent less than an earlier range and a second cut this year.
Cable & Wireless Worldwide Plc plunged 14 percent to 45 pence, its largest drop in three months, after saying that its profit this year will miss estimates because of slower-than- expected sales orders. The telecommunications company also said it accepted the resignation of Chief Executive Officer Jim Marsh with immediate effect. Chairman John Pluthero will take the CEO role, the company said in a statement.
Colruyt NV slumped 13 percent to 32.80 euros, the biggest decline since 1991, after Belgium’s biggest discount food retailer reported full-year profit that missed analysts’ estimates.
Siemens AG (SIE) declined 1.9 percent to 91 euros as Europe’s largest engineering company said it must increase efforts to foster growth in the second half because the stimulus from the global economic recovery is fading.
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