European Stocks Rise for Fourth Day; Rio Tinto Advances
European stocks advanced for a fourth day, erasing earlier losses, as shares of commodity companies and banks gained.
Rio Tinto Group led basic-resources producers higher, climbing 2.9 percent. Bankia SA (BKIA) surged 24 percent. ING Groep NV (INGA), the largest Dutch financial-services company, lost 1.3 percent and Securitas AB, the world’s second-biggest guarding-services company, sank 8.8 percent, both after reporting worse-than- estimated earnings.
The Stoxx Europe 600 Index rose 0.2 percent at 269.20 at the close of trading, the highest since March 19. The benchmark measure has rallied 15 percent since June 4, racking up nine straight weeks of gains, as policy makers eased repayment terms for Spanish lenders and optimism grew that central banks will announce more stimulus measures.
“We’ve had a fairly anodyne and disappointing earnings season, which will downgrade earnings expectations for 2013,” said Jeremy Batstone-Carr, head of research at Charles Stanley Group Plc in London. “The recent rise in the markets is most surely down to expectations of more central bank stimulus; however, this can’t be guaranteed.”
Of the 535 companies in western Europe to have reported results this quarter, 52 percent had per-share profit that missed analyst projections, according to data compiled by Bloomberg. Earnings fell 5.7 percent in the period.
The volume of shares changing hands on the Stoxx Europe 600 Index (SXXP) today was 20 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
The Bank of England cut its growth forecast and said inflation will be below its target in two years as the crisis in the euro area and the U.K. fiscal squeeze weigh on demand. The central bank sees annual expansion in gross domestic product of about 2 percent in two years, compared with a projection in May of 2.5 percent. It sees consumer-price growth at about 1.6 percent by then, below its 2 percent goal.
Greece’s credit rating may be cut again by S&P on concern a worsening economy raises the likelihood the nation will need more support from European Union lenders.
National benchmark indexes fell in 11 of the 18 western European markets today. The U.K.’s FTSE 100 Index rose 0.1 percent, France’s CAC 40 Index declined 0.4 percent and Germany’s DAX Index retreated less than 0.1 percent.
The outlook on Greece’s CCC rating, already eight levels below investment grade, was revised to negative from stable, S&P said yesterday in a statement. The change reflects the risk of a downgrade if Greece is unable to obtain the next disbursement from the European Union and International Monetary Fund rescue package, the rating company said.
“In Europe, markets are more concerned about political and policy issues rather than earnings and growth,”said Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GmbH, which oversees about $22 billion. A relaxed view about levels of global economic growth has meant that there has not been significant selling pressure among investors, according to Saxinger.
A gauge of mining shares was the best performer in the Stoxx 600, climbing 1.5 percent.
Rio Tinto, the world’s third-largest mining company, rose 2.9 percent to 3,220 pence even after reporting a 22 percent drop in first-half profit. Fresnillo Plc, the biggest primary silver producer, advanced 2.3 percent to 1,565 pence.
Bankia, the lender Spain nationalized in May, jumped 24 percent to 1.27 euros. The shares have more than doubled since sliding to a record low on July 17.
Standard Chartered (STAN) Plc added 8.6 percent to 1,315.5 pence after yesterday plunging the most on record after being accused of violating U.S. money laundering laws over its dealings with Iranian banks.
A large fine and loss of U.S. banking licenses could result in Standard Chartered becoming a takeover target for bigger lenders, including JPMorgan Chase & Co., that want a larger presence in emerging markets, Jon Kirk, a partner of financials research at Redburn Partners LLP, wrote in a report.
Tod’s SpA (TOD), the Italian maker of pink alligator loafers, gained 10 percent to 84.75 euros as its first-half revenue of 482.5 million euros beat estimates of 476.4 million euros.
ING slipped 1.3 percent to 5.68 euros after reporting second-quarter net income of 1.17 billion euros ($1.45 billion), missing analyst estimates of 1.26 billion euros.
Securitas (SECUB) tumbled 8.8 percent to 49.85 kronor after second- quarter net income of 337 million kronor ($50 million) trailed the average analyst estimate of 422 million kronor.
Nokian Renkaat Oyj (NRE1V), the Nordic region’s largest tire maker, retreated 5.1 percent to 31.01 euros after second-quarter sales of 413.8 million euros missed estimates of 416.3 million euros.
Kloeckner & Co. SE, Europe’s biggest independent steel trader, slumped 4.3 percent to 7.17 euros after reporting its fourth consecutive quarterly loss and increasing job cuts as the region’s debt crisis weakened demand.
The net loss was 38 million euros, compared with net income of 5 million euros a year earlier, the Duisburg, Germany-based company said today in a statement.
SAS Group, the Nordic region’s largest airline, slipped 1.7 percent to 5.85 kronor after reporting second-quarter profit that missed analysts’ estimates as fuel costs increased and European economies weakened.
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