European stocks rose for the first time in three days on speculation that the Federal Reserve will opt for more stimulus, outweighing a surge in Spanish borrowing costs to a euro-era record.
TomTom NV (TOM2) rallied 16 percent after Apple Inc. (AAPL) agreed to use its digital maps. Lafarge (LG) SA rose more than 2 percent after announcing plans to increase earnings by 54 percent by 2015. Lagardere SCA (MMB) retreated 2.4 percent after the company lowered its advertising-revenue target.
The Stoxx Europe 600 Index (SXXP) gained 0.6 percent to 243.44 at the close in London, after earlier sliding as much as 0.4 percent. The index yesterday erased gains in the final hour of trading yesterday as optimism faded that the 100 billion euro bank bailout for Spain would contain the debt crisis. The gauge has retreated 11 percent from its high this year on March 16.
“There is hope,” said Jerome Forneris, who helps manage $8.5 billion at Banque Martin Maurel in Marseille. “People will say: in nine days, the Fed will do what it can to support the economy. It’s a very important factor of support for U.S. and European stocks. It wouldn’t surprise me to see a strong announcement from the Fed to boost the U.S. economy.”
The Federal Open Market Committee holds its next policy meeting on June 20. Federal Reserve Bank of Chicago President Charles Evans said he would support a variety of measures to generate faster job growth.
Evans Favors Stimulus
“I’ve been in favor of pretty much any accommodative policy I’ve heard about,” Evans said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu for broadcast today. “Extending the Twist would be useful,” he said, referring to a plan expiring this month that lengthens the average duration of bonds in the Fed’s portfolio. “More asset purchases would be useful. More mortgage-backed security purchases would be good.”
The volume of shares changing hands on the Stoxx 600 was 16 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
Spanish borrowing costs climbed as European government bonds slumped on concern policy makers aren’t doing enough to prevent the currency bloc’s financial woes from deepening. The yield on Spain’s 10-year bonds rose 20 basis points to 6.71 percent today, after earlier breaching the euro-era record of 6.78 percent reached on Nov. 17.
Fitch Ratings’ Managing Director Ed Parker warned at an event in Oslo today that Spain’s government will miss its budget-deficit targets for this year and next.
Fitch Downgrades Lenders
Fitch cut the longer-term issuer default ratings of 18 Spanish banks today, including Bankia SA. (BKIA) The company downgraded Spain’s sovereign rating last week. Fitch cited concern that loans will further deteriorate.
National benchmark indexes advanced in 11 of the 18 western-European markets. France’s CAC 40 climbed 0.1 percent, the U.K.’s FTSE 100 added 0.8 percent and Germany’s DAX increased 0.3 percent. Italy’s FTSE MIB slid 0.7 percent as bank stocks retreated.
TomTom surged 16 percent to 3.80 euros, its biggest rally since October after Apple agreed to use its digital maps in the next version of its mobile software.
Lafarge climbed 2.1 percent to 31.28 euros after the world’s largest cement maker said it will increase its earnings by 1.75 billion-euro ($2.2 billion) with new products and spending reductions. That included 1.3 billion euros in cost cuts over the period.
Basilea, Julius Baer
Basilea Pharmaceutica (BSLN) AG added 4 percent to 46 Swiss francs after GlaxoSmithKline Plc (GSK) bought the marketing rights to the company’s only approved drug for 146 million pounds ($227 million). The British drugmaker will pay an additional 50 million pounds if the treatment reaches agreed goals.
Julius Baer Group Ltd. (BAER) climbed 2.7 percent to 32.54 francs after UBS AG upgraded the shares to buy from neutral, saying the “current environment poses only an earnings risk for Julius Baer, not a balance-sheet risk.”
EON AG, Germany’s largest utility, advanced 2 percent to 14.62 euros. The stock was also raised to buy from neutral at UBS AG, which predicted a re-rating of the stock during the second half of this year.
Lagardere slipped 2.4 percent to 18.86 euros. France’s largest publishing company lowered its advertising revenue target for its media business for this year. The company forecast that media-advertising sales will fall 3 percent to 5 percent. It had predicted flat revenue growth for the year.
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