European Stocks Rebound From Two-Year Low; BNP, SocGen Rally
European stocks rose, rebounding from a two-year low, as policy makers eased investor concern that the region’s debt crisis is spreading and the global economy is weakening.
BNP Paribas (BNP) SA and Societe General SA led a rally in banks, surging more than 8 percent. Bayer AG (BAYN) climbed 7.1 percent as its Xarelto blood thinner-drug won European backing for use in irregular-heartbeat patients. Adidas AG (ADS) rose 2.8 percent as competitor Nike Inc. (NKE) reported profit that topped estimates.
The Stoxx Europe 600 Index gained 0.6 percent to 216.19 at the 4:30 p.m. close in London, erasing losses in the final hour of trading after earlier falling as much as 2.6 percent. The gauge slid to the lowest since July 2009 yesterday, extending the decline from this year’s high on Feb. 17 to 26 percent, amid concern the global economic recovery is stalling. The measure has tumbled 6.1 percent this week, the most since Aug. 5.
“Risk assets seem very attractive,” said Dan Morris, a global strategist at JPMorgan Asset Management, which manages $1.3 trillion for clients. “We appreciate there is a risk that it’s not going to work out so we hedge any of our long term positions.” He spoke in a Bloomberg Television interview in London, saying he is “overweight” risk assets.
National benchmark indexes rose in 10 of the 18 western European market today. Germany’s DAX Index (DAX) gained 0.6 percent, France’s CAC 40 climbed 1 percent and the U.K.’s FTSE 100 advanced 0.5 percent.
Group of 20 finance chiefs pledged to address rising risks to the global economy and pushed Europe to contain its sovereign debt crisis after concern the world is on the brink of another recession sent stocks tumbling.
Policy makers are “committed to a strong and coordinated international response to address the renewed challenges facing the global economy,” G-20 finance ministers and central bank governors said in a statement late yesterday in Washington. Many urged Europe to implement a July promise to expand the powers of a rescue fund, Japanese Finance Minister Jun Azumi said.
The European Central Bank may act to address risks to growth as soon as next month should economic data disappoint, Governing Council member Luc Coene said.
“The ECB has never ruled out things beforehand,” Coene, who heads the Belgian central bank, said in an interview in Washington late yesterday when asked if an interest-rate cut were warranted. “If the data in early October shows that things are worse than we anticipated we will look at the kind of decisions we have to take for that.”
Societe Generale (GLE) and BNP Paribas, France’s biggest banks, soared 8.8 percent to 16.65 euros and 9.8 euros to 25.32 euros, respectively, amid speculation that central banks will take action to prevent another financial crisis. Banco Santander SA (SAN), Europe’s second-biggest lender, rose 4.6 percent to 5.73 euros in Madrid.
The Basel Committee on Banking Supervision will consider the need for changes to capital surcharges on the biggest banks amid warnings from lenders that the measures may stymie the financial system’s recovery, according to two people familiar with the talks.
Bayer, Germany’s biggest drugmaker, rose 7.1 percent to 39.42 euros after winning the backing of a European drug advisory panel for the use of its Xarelto drug with patients with irregular heartbeat. The decision puts the blood thinner in line for approval in a market that may reach $9 billion in annual sales worldwide.
Adidas, the world’s second-biggest sporting goods company, added 2.8 percent to 47.29 euros. Nike said net income in the quarter ended Aug. 31 rose 15 percent to $645 million, or $1.36 a share. Analysts projected $1.21 a share, according to the average of 18 estimates compiled by Bloomberg.
National Bank of Greece SA (ETE) fell 7.4 percent to 2.76 euros as the country’s biggest bank and seven other Greek lenders had their credit ratings lowered by Moody’s Investors Service on concern over their holdings of the nation’s government bonds.
“Moody’s believes that private creditors may incur substantial economic losses on their Greek government bond holdings beyond the terms of the current debt exchange,” Moody’s analysts including Nicosia-based Nondas Nicolaides wrote. Alpha Bank SA slumped 13 percent to 1.30 euros and EFG Eurobank Ergasias SA (EUROB) tumbled 12 percent to 94 euro cents.
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