European stocks climbed to their highest level in 11 weeks as signs of stronger growth in China and Japan outweighed a selloff in Greek lenders after a meeting of euro-area leaders discussed the region’s debt crisis.
BHP Billiton Ltd. (BHP) and Rio Tinto Group led a rally in mining companies as metal prices surged in London. TomTom NV (TOM2) soared 19 percent after posting earnings that topped analysts’ estimates. National Bank of Greece SA (ETE) tumbled 21 percent amid reports that creditors may have to write down as much as 60 percent of their holdings in Greek debt.
The benchmark Stoxx Europe 600 Index rose 1.3 percent to 242.03 at the close in London, climbing for a second day to its highest level since Aug. 4. The gauge has rallied for four straight weeks, its longest stretch of weekly gains since December, amid speculation the euro area’s political leaders will find a solution to the crisis that has Greece on the edge of a default. The measure has still plunged 17 percent from this year’s high on Feb. 17.
“The picture coming through from China still remains positive, but the wider issue of what’s happening in the euro zone continues to be the main area of debate,” said Henk Potts, an equity strategist at Barclays Wealth in London which oversees $239 billion. “There is hope that we will start to see some concrete proposals from policy makers.”
Leaders at yesterday’s summit in Brussels ruled out tapping the European Central Bank’s balance sheet to boost the euro area’s rescue fund, the European Financial Stability Facility, and excluded a forced restructuring of Greece’s debt. The politicians looked at strengthening the International Monetary Fund’s role and outlined plans to aid banks.
The complete blueprint for the rescue fund won’t come together until a summit in two days. Like yesterday, it will start with all 27 European Union leaders before the 17 heads of the euro-area economies gather on their own.
National benchmark indexes rose in 15 of the 18 western- European markets today. The U.K.’s FTSE 100 Index gained 1.1 percent. Germany’s DAX Index gained 1.4 percent and France’s CAC 40 Index increased 1.6 percent. Greece’s ASE Index dropped 4.5 percent.
“The markets have been very patient and they are hoping they will be rewarded for their patience,” said Barclays’ Potts. “Once these proposals are put through, the world may start to look a bit better as the dark macro clouds dissipate.”
Stocks rallied in Asia today after a report showed that China’s manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009. A separate release showed Japan’s exports increased in September more than economists had forecast.
Commodity Shares Rally
Mining companies were the biggest gainers on the Stoxx 600 as copper rallied on the London Metal Exchange. BHP Billiton, the world’s largest mining company, gained 5.2 percent to 1,996 pence, Rio Tinto soared 7.1 percent to 3,373.5 pence and Xstrata Plc (XTA) rose 6.8 percent to 1,016 pence.
TomTom surged 19 percent to 3.62 euros, its biggest advance since 2009, after Europe’s biggest maker of portable-navigation devices reported third-quarter net income of 28.9 million euros ($40 million). That beat the average analyst estimate for 15.9 million euros of profit in a Bloomberg survey.
Greek banks led declining shares as National Bank of Greece, the country’s largest lender, sunk 21 percent to 1.60 euros, its biggest drop since at least 1992. EFG Eurobank Ergasias, the second largest, slumped 20 percent to 63 euro cents, its biggest plunge since at least 1999.
Luxembourg’s Jean-Claude Juncker, who chairs the group of euro-area finance ministers, said talks on the private sector’s involvement in a second aid package for Greece have focused on losses of as much as 60 percent for bondholders.
Reuters yesterday reported that lenders have offered to write down 40 percent of their Greek debt. Austrian Chancellor Werner Faymann told Austrian radio ORF he sees a “good chance” to convince Greece’s private creditors to accept a haircut of as much as 50 percent, while Ireland’s Transport Minister Leo Varadkar told Dublin-based RTE radio that discounts of between 40 percent and 60 percent were being discussed.
Elsewhere, Nobel Biocare Holding AG (NOBN) soared 14 percent to 11.38 Swiss francs, the largest jump since October 2002, after NZZ am Sonntag reported that EQT Partners AB and Bain Capital LLC are considering buying the world’s second-biggest dental- implant maker. The newspaper cited two unidentified sources.
Nobel Biocare Surges
EQT, a Stockholm-based private-equity company, has looked at Nobel Biocare as a takeover target “for some time,” NZZ reported. Bain, a U.S. buyout fund manager, has been assessing for “several months” whether the company is a “buy” or the shares will fall further, according to the report.
“We have had no contact and are in no discussions with anyone,” said Nicolas Weidmann, a spokesman for Nobel Biocare.
Swatch Group AG (UHR) climbed 4.8 percent to 373.50 francs, its highest price in a month, after NZZ also reported that the company’s sales this year will “clearly exceed” 7 billion Swiss francs ($7.9 billion), while growth adjusted for currency swings may reach 9 percent to 11 percent in 2012. The newspaper cited Chief Executive Officer Nick Hayek.
Hayek called September the watchmaker’s strongest-ever month, according to the report. The company has never had such a large order backlog, NZZ said, citing Hayek.
Faurecia (EO) SA rallied 12 percent to 19.76 euros as Europe’s largest maker of car interiors confirmed its 2011 targets after posting third-quarter sales that rose 16 percent.
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