European Stocks Advance as Greece Calls Debt Talks ‘Productive’
European stocks climbed as Greece described its debt talks with the European Union and the International Monetary Fund as “productive” and investors speculated the Federal Reserve will provide more stimulus.
EON AG and RWE AG (RWE), Germany’s biggest utilities, climbed more than 3.5 percent after a court suspended a nuclear-fuel tax. Barratt Developments Plc (BDEV) surged 5.7 percent after Citigroup Inc. advised buying the shares. SAP AG (SAP) rose 2.3 percent.
The Stoxx Europe 600 Index rose 1.8 percent to 229.1 at the 4:30 p.m. close in London. The Federal Reserve, led by Chairman Ben S. Bernanke, will decide tomorrow to replace short-term Treasuries with long-term bonds, according to the majority of economists surveyed by Bloomberg. The move is known as “Operation Twist,” for its goal to bend the yield curve.
“Markets are up because they chose to see developments in Greece as a positive,” said Mads Koefoed, a market strategist at Saxo Bank A/S in Copenhagen. “If the Fed only announces an ‘Operation Twist,’ switching the duration of its bond holdings, there’s a good chance equity markets will not be very impressed.”
The Federal Open Market Committee will decide to replace short-term Treasuries in its $1.65 trillion portfolio with long- term bonds, according to 71 percent of 42 economists surveyed by Bloomberg. The move will probably fail to trim the 9.1 percent unemployment rate, 61 percent of respondents said.
Slowing Growth
The Stoxx 600 has fallen 21 percent from this year’s peak on Feb. 17 amid speculation that global economic growth is slowing and as Europe’s debt crisis spreads. The slide has dragged the price-earnings ratio on the measure to 9.6 times estimated profits, according to data compiled by Bloomberg.
National benchmark indexes rose in every western-European market except Greece and Iceland today. The U.K.’s FTSE 100 Index advanced 2 percent, Germany’s DAX Index gained 2.9 percent and France’s CAC 40 Index climbed 1.5 percent.
Greek Finance Minister Evangelos Venizelos held “productive and substantive” discussions with European Union and International Monetary Fund officials yesterday about the country’s bailout. Prime Minister George Papandreou’s government will hold another call today as European leaders squabble over the terms of a July agreement and the prospect that they will be forced to channel more money to keep Greece in the currency union.
Greek Aid
The IMF said that the program carried out by the government had produced “impressive fiscal consolidation,” while EU economics spokesman Amadeu Altafaj told reporters in Brussels yesterday that the European Commission has not demanded more of Greece than was agreed to in the international aid program for the country.
RWE and EON jumped 3.7 percent to 25.93 euros and 4 percent to 15.77 euros, respectively, as a Hamburg court suspended a federal tax on companies that use nuclear fuel. The court said that the government should reimburse an unnamed power plant operator, which asked that the tax be suspended, the 96 million euros ($131 million) it had paid on the levy.
Barratt Developments rallied 5.7 percent to 82.2 pence as Citigroup upgraded the shares to “buy” from “hold,” saying the company trades at too great a discount to the value of its assets.
SAP Shares Gain
SAP, the world’s biggest maker of business software, gained 2.3 percent to 37.35 euros after a U.S. judge asked Oracle Corp. to consider revising its request for a review of a court order overturning a damage award against the German software maker.
U.S. District Judge Phyllis Hamilton in Oakland, California, on Sept. 1 granted SAP’s motion to throw out the copyright-infringement verdict against it. She ruled that SAP should get a new trial for damages if Oracle rejects her decision to reduce the amount to $272 million, which she said should be the maximum in damages based on the evidence at trial.
NKT Holding A/S, the Danish maker of industrial vacuum cleaners and power cables, surged 12 percent to 214.30 kroner after saying it may sell its flexible pipeline joint venture with Norwegian offshore engineering group Subsea 7 SA. Subsea 7 rose 5 percent to 122.80 kroner.
Zodiac Aerospace (ZC) rallied 6.2 percent to 58.30 euros after announcing that annual sales climbed 38 percent to 2.75 billion euros in the year ended August. The company confirmed its full- year current operating margin target of more than 13 percent. The company, which sells airplane equipment, said that 11 percent of the full-year sales growth came from recent acquisitions.
French Banks Fall
Declines at some banks limited gains on the Stoxx 600. Societe Generale (GLE) SA sank 3.1 percent to 17.15 euros and BNP Paribas (BNP) SA declined 6.5 percent to 24.92 euros.
Italy had its credit rating cut to A from A+ by Standard & Poor’s on concern that weakening economic growth and a “fragile” government mean the nation won’t be able to reduce the euro area’s second-largest debt burden.
S&P said Italy’s net general government debt is the highest among A-rated sovereigns, and the company expects it to peak later and at a higher level than it had estimated.
Deutsche Lufthansa AG (LHA), Europe’s second-biggest airline, declined 4.4 percent to 10.32 euros, its largest slide in two weeks, after saying operating profit in 2011 will fall short of last year’s 876 million euros. International Consolidated Airlines Group SA, the owner of British Airways and Spain’s Iberia, declined 2.6 percent to 150.2 pence, while Air France- KLM Group fell 3.7 percent to 5.74 euros.
To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
European Stocks Climb
Simon Dawson/Bloomberg
A stockbroker monitors stock prices on his computer screens at Shore Capital Group Ltd. in London.
A stockbroker monitors stock prices on his computer screens at Shore Capital Group Ltd. in London. Photographer: Simon Dawson/Bloomberg
Sept. 20 (Bloomberg) -- Russ Koesterich, global chief investment strategist at the IShares unit of BlackRock Inc., discusses Standard & Poor’s decision to cut Italy’s credit rating and the outlook for Europe's debt crisis. S&P lowered its rating last night to A from A+, saying weak economic growth, a “fragile” government and rising borrowing costs would make it difficult to reduce Europe’s second-biggest debt. Koesterich, speaking with Betty Liu and Hans Nichols on Bloomberg Television's "In the Loop," also talks about President Barack Obama's tax proposal. (Source: Bloomberg)
Sept. 20 (Bloomberg) -- Ewen Cameron Watt, chief investment strategist at the BlackRock Investment Institute, talks about Standard & Poor’s downgrade of Italy’s credit rating, and gold and stocks. Cameron Watt speaks with Susan Li on Bloomberg Television's "First Up. (Source: Bloomberg)
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