European Stocks Rise for Second Day; UBS, Charter Lead Advance
European stocks rose for a second day amid continuing speculation the Federal Reserve will take action to bolster the economy and as Chinese manufacturing data exceeded forecasts.
UBS AG (UBSN), Switzerland’s biggest bank, advanced 2.1 percent after saying it plans to cut 3,500 jobs to trim costs. Charter International Plc (CHTR) soared 20 percent as the welding and automation-equipment maker said it’s in takeover talks with a potential rival bidder to Melrose Plc. National Bank of Greece SA (ETE) sank to a 14-year low as the nation’s bonds fell.
The benchmark Stoxx Europe 600 Index added 0.8 percent to 226.63 at the 4:30 p.m. close in London, after earlier surging as much as 2.2 percent. The gauge has still fallen 22 percent from this year’s peak on Feb. 17 as European and U.S. economic data that trailed forecasts added to concern the global recovery is at risk. The retreat has left the Stoxx 600 trading at about 9.4 times its companies’ estimated earnings, near the lowest since March 2009, Bloomberg data show.
“Chinese PMI is today’s good news as it shows the world is not falling apart as everybody seemed to believe,” said Morten Kongshaug, a chief equity analyst at Danske Bank A/S in Copenhagen. “European PMI is also a positive as the economy is not contracting.”
Chinese manufacturing may contract at a slower pace in August as the world’s second-biggest economy weathers slumping global confidence, according to a preliminary purchasing- managers index compiled by HSBC Holdings Plc and Markit Economics. The reading of 49.8 for August compared with 49.3 last month. A result below 50 indicates a contraction.
A composite index based on a survey of euro-area purchasing managers in both services and manufacturing remained at 51.1 in August, Markit said. Economists had forecast a drop to 50, the median of 15 estimates in a Bloomberg News survey showed.
The Fed is holding its annual symposium in Jackson Hole, Wyoming, this weekend. This time last year Chairman Ben S. Bernanke hinted that the central bank might embark on a second round of asset purchases, kicking off a 28 percent rally in the Standard & Poor’s 500 Index that ended in a three-year high on April 29.
“Much of the gains being seen here seem to be coming off the expectation that the Fed will serve up further stimulus measures, possibly as soon as the end of this week,” said Cameron Peacock, a market analyst at IG Markets in Melbourne. “Clearly with this being priced in, failure to deliver here will see traders heading for the exits once again.”
Stocks pared their advance as a gauge of German investor confidence fell more than economists forecast to the lowest in more than 2 1/2 years in August on concern Europe’s debt crises will curb growth.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, dropped to minus 37.6 from minus 15.1 in July. That’s the lowest since December 2008. Economists expected a decline to minus 26, according to the median of 36 estimates in a Bloomberg survey.
National benchmark indexes rose in half of the 18 western European markets. The U.K.’s FTSE 100 gained 0.7 percent, while Germany’s DAX and France’s CAC 40 advanced 1.1 percent. Greece’s ASE lost 3.2 percent to the lowest level since 1996.
UBS Job Cuts
UBS gained 2.1 percent to 10.75 Swiss francs after saying it will eliminate about 3,500 jobs, or 5.3 percent of the workforce, as stricter capital requirements and a slowdown in client trading reduce earnings. Credit Suisse Group AG (CSGN), the second-largest Swiss bank, rose 2.3 percent to 21.12 francs.
Charter rallied 20 percent to 747 pence, the biggest gain since June. The company has turned down two indicative cash-and- share offers from Melrose this year.
ARM Holdings Plc (ARM), the designer of chips for Apple Inc.’s iPhone, added 4.5 percent to 514 pence as technology shares led gains in the Stoxx 600. The Guardian, the London-based Times and the Daily Mail all reported that the company may be a takeover target after Hewlett-Packard Co.’s acquisition of Autonomy Corp. last week.
Logitech International SA (LOGN), the world’s biggest maker of computer mice, advanced 6.7 percent to 7.71 Swiss francs.
G4S Plc (GFS), the largest publicly traded provider of security services, gained 8.5 percent to 264.4 pence. The company reported first-half net income rose to 108 million pounds ($179 million) from 94 million pounds and said it’s optimistic about business in the second half and into 2012.
Wacker Chemie AG (WCH), the second-biggest producer of solar- grade silicon, rose 3.4 percent to 95.53 euros as Goldman Sachs Group Inc. upgraded the shares. Renewable Energy Corp. ASA, a Norwegian maker of solar energy components, climbed 5.1 percent to 8.89 kroner.
National Bank of Greece, the nation’s largest lender, slid 9 percent to 3.23 euros, the lowest since 1997. EFG Eurobank Ergasias SA (EUROB) retreated 5.6 percent to 2.03 euros.
Greek government bonds slumped, with 10-year yields climbing to the highest level in a month, amid uncertainty over the details of a new loan package for the Mediterranean nation. Europe is in the midst of agreeing 159 billion euros in new public aid for Greece and some nations including Finland have demanded collateral in return for loans.
NKT A/S slumped 18 percent to 182.90 kroner, the largest decline in 10 years, as the world’s biggest maker of industrial vacuum cleaners cut its full-year outlook and reported second- quarter net income that fell short of analyst estimates.
Fresnillo Plc (FRES), the world’s largest primary silver producer, slid 7.2 percent to 1,892 pence as the precious metal fell as much as 2.7 percent in London.
To contact the reporter on this story: Peter Levring in Copenhagen at Plevring1@bloomberg.net
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