European stocks climbed, with the benchmark Stoxx Europe 600 Index rising for a fourth day out of five, as some investors speculated that the 9.2 percent drop in equities this month makes their valuations attractive.
Vestas Wind Systems A/S posted the best performance in the Stoxx 600 after reporting second-quarter earnings that beat analysts’ estimates. Health-care companies rallied as Sanofi climbed 2.8 percent. Carlsberg A/S, the Nordic region’s largest brewer, plunged 17 percent after reducing its full-year outlook.
The Stoxx 600 increased 0.2 percent to 238.05 at the 4:30 p.m. close in London, reversing an earlier drop of as much 1.4 percent. The Stoxx 600 has still declined 18 percent from this year’s high on Feb. 17, on concern that Europe will fail to contain its sovereign-debt crisis and that the economic recovery is faltering in the U.S. The retreat has left the European benchmark trading at 9.8 times the estimated earnings of its companies, near the lowest valuation since March 2009.
“Equity valuations are very attractive,” said Jason Pride, a strategist at Glenmede, which manages $19.8 billion for clients, in a Bloomberg Television interview today. “We’re favoring equities, but we’re staying defensive. There is a larger risk than normal that you have some sort of systemic event happen before the policy makers react” in Europe “and that’s why the markets are hanging out where they are today.”
German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed to press for closer euro-area cooperation, tougher deficit rules and a harmonization of their corporate tax rates. They rejected an expansion of the 440 billion-euro ($635 billion) rescue fund. The leaders of the euro area’s two biggest economies spoke after a two-hour meeting in Paris.
U.K. Interest Rates
Bank of England policy makers Spencer Dale and Martin Weale ended their push for an increase in interest rates this month as the euro-area crisis and signs of a global economic cooling threatened to hurt growth in Britain. The nine-member Monetary Policy Committee voted unanimously to hold the key rate at a record low 0.5 percent, according to the minutes of the Aug. 3-4 meeting published today in London.
A report today showed that wholesale costs in the U.S. rose in July more than forecast, led by higher prices for tobacco, trucks and pharmaceuticals. The 0.2 percent advance in the producer-prices index followed a 0.4 percent drop in June, Labor Department figures showed today in Washington. Economists had forecast a 0.1 percent increase, according to the median estimate in a Bloomberg News survey.
National benchmark indexes rose in 12 of the 18 western European markets this week. Germany’s DAX Index retreated 0.8 percent and the U.K.’s FTSE 100 Index declined 0.5 percent. France’s CAC 40 Index gained 0.7 percent.
Vesta Shares Soar
Vestas surged 24 percent to 110.10 kroner, its largest advance since 2003. The world’s biggest maker of wind turbines reported a second-quarter net income of 55 million euros, exceeding the 41.5 million-euro average estimate of 10 analysts surveyed by Bloomberg.
Sanofi jumped 2.8 percent to 49.92, leading a gauge of health-care companies to one of the best performances of the 19 industry groups in the Stoxx 600 today.
Swiss Life Holding AG (SLHN) gained 3.7 percent to 103.30 francs as Switzerland’s biggest life insurer posted first-half profit of 403 million francs ($511 million). That beat the 277.3 million-franc average estimate of 14 analysts surveyed by Bloomberg.
Carlsberg Shares Slump
Carlsberg tumbled 17 percent to 372 kroner, its largest drop since at least 1990, after forecasting 2011 adjusted net income growth of 5 percent to 10 percent, compared with a previous prediction of 20 percent. The company reported second- quarter earnings before interest and taxes of 3.7 billion kroner ($717 million), compared with an average estimate of 4.33 billion kroner in a Bloomberg survey of 17 analysts.
The new shares of Deutsche Boerse AG (DB1), the operator of the Frankfurt exchange, and London Stock Exchange Group Plc (LSE) fell 5 percent to 41.10 euros and 2.8 percent to 846 pence, respectively, after Sarkozy said France and Germany will propose a financial-transaction tax in September. Sarkozy didn’t provide details on the proposal during a press conference with Merkel in Paris.
Heidelberger Druckmaschinen AG (HDD) tumbled 8.9 percent to 1.51 euros, its lowest closing price since at least 1998, after the German maker of printing presses was cut to “sell” from “neutral” at UBS AG.
Aixtron SE sank 11 percent to 15.45 euros, its largest retreat in more than a year, as the maker of equipment used to produce LED screens was downgraded to “hold” from “buy” at Deutsche Bank AG.
Nobel Biocare Holding AG (NOBN) slumped 5.8 percent to 10.72 Swiss francs, its lowest price since 2001, after the second-biggest dental implant maker was downgraded to “underweight” from “overweight” at Morgan Stanley.
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