European (SXXP) stocks advanced to the highest level since July as the Federal Reserve raised its economic assessment of the world’s largest economy.
EON AG, Germany’s biggest utility, gained 7 percent after it reported 2011 earnings that topped analysts’ estimates. Credit Suisse Group AG and Legal & General Group Plc (LGEN) advanced as a gauge of banks and insurers rallied. Arkema SA, the French maker of plastics additives, fell 5 percent as a shareholder is selling as much as 450 million euros ($589 million) of the company’s stock.
The Stoxx Europe 600 Index (SXXP) climbed 0.3 percent to 270.27 at the close. The gauge has gained 11 percent so far this year amid optimism that the euro area will contain its sovereign-debt crisis and better-than-expected U.S. economic data.
“The U.S. continues to deliver rather good economic data and the situation in Greece has calmed down for the time being,” said Peter Braendle, who helps manage $60 billion at Swisscanto Asset Management AG in Zurich. “For Southern Europe I hope for further structural reforms, not just saving programs, but it’s certainly a positive impulse for stock markets.”
The number of shares changing hands on the Euro Stoxx 50 Index was 31 percent higher than the 30-day average, according to data compiled by Bloomberg.
The Stoxx 600 rallied 1.8 percent yesterday after reports showed German investor confidence in March increased more than forecast and U.S. retail sales rose in February.
National benchmark indexes rose in 15 of the 18 western- European (SXXP) markets. Germany’s DAX Index added 1.2 percent. France’s CAC 40 Index gained 0.4 percent and the U.K.’s FTSE 100 Index fell 0.2 percent.
The Federal Open Market Committee said late yesterday that strains in global financial markets have eased and the labor market is gathering strength. At the same time, it said that the unemployment rate is “elevated” and “significant downside risks” remain. Federal Reserve Chairman Ben S. Bernanke is holding to his plan to the keep benchmark interest rate close to zero through at least 2014.
“We now have a clearer understanding of how the Fed is positioned,” said Chris Weston, an institutional trader at IG Markets in Melbourne. “At the margin this is a mildly hawkish statement, however what could be better than clear economic growth with low rates?”
In a separate statement, the U.S. central bank said 15 of the nation’s largest 19 banks could maintain adequate capital levels even in a recession scenario.
Greece’s credit rating was lifted out of the default category by Fitch Ratings on optimism that a debt swap will reduce the risk that the country eventually reneges on its obligations.
Greece was raised four levels to B- from restricted default and given a stable outlook by Fitch. New government bonds have a B- rating, while debt that is not governed by Greek law has a C rating pending settlement on April 11, Fitch said.
German Chancellor Angela Merkel said that European efforts to resolve the debt crisis are making progress, even as “imbalances” in euro-area economies show that the task is far from complete.
“We’ve come a good way along the mountain path, but we’re not completely over the mountain,” Merkel told reporters in Rome late yesterday after talks with Italian Prime Minister Mario Monti. “I suspect that in the next few years there will continue to be new mountains -- there won’t be a celebratory event in which we say we’re over the mountain and now we can sit among the trees and say that we’ve done it.”
Italy sold 6 billion euros of bonds today, with borrowing costs on its three-year debt falling to the lowest since October 2010 as European Central Bank loans helped boost demand. The Treasury sold 5 billion euros of a new three-year bond to yield 2.76 percent and 1 billion euros of seven-year bonds at 4.3 percent, meeting the 6 billion-euro maximum set for the sale.
The regulator is letting the lenders use more of their deposits to make loans after China’s exports, industrial production and retail sales declined in the first two months.
EON increased 7 percent to 18.28 euros, as it reported 2011 adjusted net income dropped 50 percent to 2.5 billion euros, topping the 2.33 billion-euro median estimate in a Bloomberg survey. Sales rose 22 percent to 113 billion euros.
Gauges of European banks and insurers pulled the Stoxx 600 higher, with Credit Suisse (CSGN) rallying 5 percent to 26.3 Swiss francs, and Legal & General advancing 7.2 percent to 134.3 pence. Natixis (KN) SA added 5.2 percent to 2.95 euros and Deutsche Bank AG (DBK) gained 3.4 percent to 38.17 euros. ING Group NV and AXA SA (CS) rose 2.5 percent to 7.01 euros, and 3.7 percent to 12.67 euros, respectively.
Home Retail Group Plc (HOME), the owner of the Argos and Homebase chains, increased 4.6 percent to 115 pence after JPMorgan & Chase Co. raised the stock to overweight, the equivalent of buy, from underweight.
Dufry AG gained 2.7 percent to 115 francs after the operator of duty-free shops reported full-year profit of 111.9 million francs ($120.6 million), trailing the average analyst estimate of 116.2 million francs. Full-year sales were 3.04 billion francs, topping the 2.66 billion-franc analyst estimate.
Salvatore Ferragamo SpA, the Italian luxury-goods maker, rallied 3.3 percent to 15.45 euros, its highest price since its initial public offering, after CA Cheuvreux said the company is seen by investors as a likely takeover target.
Wacker, Arkema Drop
Wacker Chemie AG (WCH), the second-largest maker of solar-grade silicon, declined 3.8 percent to 69.18 euros as the company said it saw a marked drop in polysilicon demand in the fourth quarter of 2011. Wacker also said some agreements were terminated, with customers withdrawing from the solar business.
Arkema (AKE) fell 5 percent to 69 euros. Investor Groupe Bruxelles Lambert SA is offering 6.2 million shares of the company for as much as 450 million euros. The shares are being sold for about 69.90 euros each, according to a term sheet.
BioMerieux (BIM), the French maker of tests for HIV and hepatitis, slumped 6.1 percent to 58.91 euros after full-year profit missed analysts’ estimates.
Symrise AG (SY1), the German maker of ingredients for Dior’s Fahrenheit, slid 5.7 percent to 21.16 euros. Equinet AG cut the stock to hold from accumulate.
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