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European Stocks Advance as U.S. House Prices Stabilize

European stocks advanced for the third time in four days as data showing the U.S. housing market is stabilizing outweighed a report that China has no intention of introducing large-scale stimulus.

CGGVeritas, the world’s largest seismic surveyor of oilfields, increased 5.7 percent as UBS AG recommended the shares. ArcelorMittal gained 4.1 percent after HSBC Holdings Plc upgraded the steelmaker. Bankia (BKIA) SA led a decline in Spanish stocks, sliding 16 percent. Repsol YPF SA, the nation’s biggest oil company, sank the most since 2008 after cutting its dividend-payout ratio.

The Stoxx Europe 600 Index rose 0.8 percent to 244.3 at the close of trading, rebounding from an earlier drop of 0.2 percent. The gauge has still retreated 10 percent from this year’s high on March 16 amid growing concern that Greece will fail to implement agreed austerity measures and leave the euro.

“There are expectations that the U.S. economy continues to be an outlier,” said Michael Hewson, a market analyst at CMC Markets in London. “European markets are being pulled up in its slip stream.”

National benchmark indexes rose in all of the 18 western European markets today, except Spain and Portugal. The U.K.’s FTSE 100 increased 0.7 percent, Germany’s DAX gained 1.2 percent and France’s CAC 40 advanced 1.4 percent.

Valuation, Volume

The Stoxx 600 is trading at 10.1 times estimated earnings, near the cheapest since January, according to data compiled by Bloomberg. The volume of shares trading on the gauge today was 10 percent lower than the average of the last 30 days.

Home values in 20 U.S. cities fell in the 12 months ended March at the slowest pace in more than a year. The S&P/Case-Shiller index of property values fell 2.6 percent from a year earlier after a 3.5 percent drop in February. The decline matched the median forecast of economists surveyed by Bloomberg. The index rose from the prior month on a seasonally adjusted basis.

Confidence among U.S. consumers unexpectedly fell in May to the lowest level in four months as Americans grew more pessimistic about the labor market. The Conference Board’s sentiment index decreased to 64.9 from a revised 68.7 in the prior month. The median forecast of economists surveyed by Bloomberg called for a reading of 69.6.

China has no intention of starting a large-scale economic stimulus program like it did during the global financial crisis, the official Xinhua News Agency said today.

China Stimulus

“The Chinese government’s intention is very clear: it will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said in the seventh paragraph of a Chinese-language article on economic policy. “The current efforts for stabilizing growth will not repeat the old way of three years ago.”

CGGVeritas added 5.7 percent to 19.65 euros as UBS upgraded the shares to buy from neutral. That was the biggest jump this year.

ArcelorMittal (MT) gained 4.1 percent to 11.89 euros. The stock was upgraded to overweight, which means investors should buy the shares, from neutral at HSBC.

Trelleborg AB, the world’s biggest maker of vibration-dampening gear, rose 6.1 percent to 73.45 kronor in Stockholm after SEB AB recommended clients to buy the shares.

Valeo SA (FR) led a gauge of auto-related shares to the biggest gain since March 8, climbing 5.1 percent to 35.97 euros. UBS said the French company is one of the few suppliers left offering both upgrades and growth potential.

Preferred shares of Volkswagen AG, Europe’s largest automaker, added 4.3 percent to 134.45 euros, gaining for a third day. Bayerische Motoren Werke AG (BMW), the biggest maker of luxury vehicles, rose 2.8 percent to 64 euros. Daimler AG (DAI) advanced 2.9 percent to 38.94 euros and Renault SA (RNO) climbed 4 percent to 35.12 euros.

Pasty Tax

Greggs Plc (GRG), a U.K. baker, jumped 8.1 percent to 504.5 pence, the biggest surge since 1997, as Chancellor of the Exchequer George Osborne reversed a plan to make hot takeaway snacks such as Cornish pasties subject to value-added tax.

Spanish lender Bankia sank 16 percent to 1.14 euros after dropping 13 percent yesterday. Spain’s IBEX 35 (IBEX) slid 2.3 percent to the lowest level in nine years.

Spain’s government bonds declined after a spokesman for the economy ministry said the nation’s preferred option for raising funds to recapitalize Bankia is via debt markets. The yield on the five-year securities climbed eight basis points to 5.78 percent.

Banks Slide

Banco Popular Espanol SA (POP) fell 3.3 percent to 1.66 euros, a fourth day of losses. Banco de Sabadell SA dropped 4.3 percent to 1.34 euros and Banco Bilbao Vizcaya Argentaria SA (BBVA) declined 2.6 percent to 4.64 euros.

Italy’s Banca Popolare di Milano Scarl (PMI) slid 3.8 percent to 32.06 euro cents. Former Chairman Massimo Ponzellini was placed under house arrest as part of a probe into transactions of Italy’s oldest cooperative bank.

Repsol sank 7.2 percent to 12.83 euros, the biggest drop since November 2008. The oil company said it will cut its dividend payout ratio to increase production outside Argentina after its YPF SA unit was seized.

Wolseley Plc (WOS) retreated 1 percent to 2,277 pence as the world’s largest supplier of heating and plumbing products reported a decline in third-quarter revenue.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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