European stocks advanced to a 13- month high, rallying for the 11th successive week, amid optimism policy makers will take steps to protect the region’s banks and as American consumer sentiment and leading economic indicators beat forecasts.
Swiss Life Holding AG (SLHN), Switzerland’s biggest life insurer, gained 3.1 percent after reporting first-half earnings that beat estimates. Bankia SA (BKIA) climbed 4.9 percent on speculation the Spanish lender will shortly receive bailout funds. Heineken NV slid 1.5 percent on a report it may raise its bid for the rest of Asia Pacific Breweries Ltd.
The Stoxx 600 climbed 0.6 percent to 272.83 at the close in London, the highest since July 8, 2011. The benchmark measure increased 1.1 percent this week as German Chancellor Angela Merkel supported a European Central Bank plan to resolve the debt crisis.
“The Merkel comments have helped the market,” said Pierre Mouton, a fund manager who helps oversee $6 billion at Notz Stucki & Cie. in Geneva. “There will be good news to come from Europe. The market was extremely pessimistic, especially on banks. Europe’s commitment on lending to banks shows that the region won’t let them fail.”
The Stoxx 600 completed its 11th successive weekly gain, the longest winning streak since January 2006. The current rally started with Greece forming a government after a second national election and continued as central banks increased stimulus measures and ECB President Mario Draghi pledged to preserve the euro at any cost.
German Chancellor Angela Merkel, speaking in Canada yesterday, backed the ECB’s insistence on conditions for helping to reduce borrowing costs in indebted countries, saying Germany is “in line” with the central bank’s approach to defend the euro.
“On many of these issues we feel we’re on the right track,” Merkel told reporters in Ottawa. Euro-area policy makers “feel committed to do everything we can to maintain the common currency.”
Germany is facing calls from Italy and Spain to pool debt to bring down bond yields, from Greece to back an easing of its austerity timetable and from the ECB for politicians to take the lead in fighting the crisis. Merkel also faces domestic pressure from her coalition partners to refuse any more aid for Greece.
The number of shares changing hands on the Stoxx 600 (SXXP) was 5.9 percent higher than the average of the past 30 days, according to data compiled by Bloomberg.
In the U.S., the Thomson Reuters/University of Michigan preliminary August index of consumer sentiment unexpectedly increased to 73.6, the highest level since May, from 72.3 the prior month. The gauge was projected to be little changed at 72.2, according to the median forecast of 72 economists surveyed by Bloomberg.
The Conference Board’s gauge of the outlook for the next three to six months increased 0.4 percent after a revised 0.4 percent drop in June, the New York-based group said today. Economists projected the gauge would rise by 0.2 percent, according to the median estimate in a Bloomberg survey.
National benchmark indexes advanced in all of the 18 western European markets except Denmark. The U.K.’s FTSE 100 Index added 0.3 percent. France’s CAC 40 Index gained 0.2 percent and Germany’s DAX Index increased 0.6 percent.
Swiss Life rose 3.1 percent to 104.90 Swiss francs. The company said first-half profit dropped 11 percent after a year- earlier tax benefit from disposing of businesses.
Net income fell to 360 million francs ($370 million), from 403 million francs a year earlier, the Zurich-based insurer said. That exceeded the 304.8 million-franc average estimate of nine analysts surveyed by Bloomberg.
Bankia SA jumped 4.9 percent to 1.47 euros, extending its rally in the four days through today to 44 percent. Reuters reported yesterday that the bank will get some rescue funds shortly. A gauge of bank shares advanced 1 percent for the second-biggest increase among the 19 industry groups in the Stoxx 600.
Banca Monte dei Paschi di Siena SpA (BMPS), the world’s oldest bank, rallied 18 percent to 21.6 euro cents after comments by Chairman Alessandro Profumo fueled speculation of shareholder changes. Fondazione Monte dei Paschi, the bank’s main investor, has to further cut its stake over time, Profumo told local Italian TV Canale 3 Toscana yesterday. An official for Fondazione declined to comment on Profumo’s interview.
Finmeccanica SpA (FNC) jumped 11 percent to 3.75 euros, the most since February. Il Messaggero reported today that the Italian government is considering a plan to sell stakes in Eni SpA (ENI), Enel SpA (ENEL) and Finmeccanica for a total value of about 25 billion euros ($31 billion), without losing control of the companies, as part of plan to cut public debt.
Enel advanced 1.3 percent to 2.57 euros.
Air France-KLM (AF) Group, Europe’s biggest airline, rallied 3.7 percent to 4.41 euros. The carrier’s biggest pilot union voted to back a management plan that will reduce staff strength in the coming years.
Orascom Development Holding AG (ODHN) dropped 6.9 percent to 14.75 francs. The company said it expects first-half sales to be between 20 percent and 25 percent higher than for the same period in 2011, while net income will fall as a result of building costs and taxes.
Lonmin (LMI) retreated 1.3 percent to 639.5 pence, paring an earlier loss of as much as 8.6 percent. That’s the lowest price since December 2008. South African police killed 35 striking workers at Lonmin’s Marikana platinum-mining complex yesterday, the worst death toll in police action since the end of apartheid in 1994.
“With each day of lost strike action, the company is losing around 2,500 ounces of platinum production and an estimated $3 million,” analysts at Absa Capital, a unit of Barclays Plc’s Absa Group Ltd., wrote in a note. “As the strike continues, we believe there is an increasing possibility of Lonmin breaching its debt covenants, resulting in the company needing to renegotiate covenants or raise capital.”
Heineken NV (HEIA) slipped 1.5 percent to 43.14 euros. The world’s third-largest brewer is in talks with Fraser & Neave Ltd. about raising its offer for the rest of Asia Pacific Breweries Ltd., said three people with knowledge of the matter.
Heineken is considering raising its offer from S$50 a share to about S$53 per share for APB, said the people, who asked not to be identified because the talks are private. A condition for raising the bid would be some guarantees over deal completion.
Valiant Holding AG (VATN) tumbled 6.4 percent to 77.10 francs for the biggest decline in the Stoxx 600. The bank said first-half net trading income declined by 10 percent to 6.9 million francs.
Vestas Wind Systems A/S (VWS), a wind turbine maker, rallied 6.9 percent to 32.50 kroner. German Environment Minister Peter Altmaier yesterday said the government will draw up proposals to overhaul a law that regulates subsidies for solar and wind-power generators. Merkel is shifting Germany away from nuclear power in favor of renewable sources following the meltdown in Japan last year.
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