European Stocks Rise Amid Speculation of China Stimulus

European (SXXP) stocks rose, after falling the most in two months yesterday, amid speculation China may announce new stimulus measures to bolster economic growth and as Spain’s cabinet approved the 2013 budget.

Credit Agricole SA (ACA) advanced 3.8 percent after saying it may soon sell its Emporiki Greek unit. Opap (OPAP) SA jumped 3 percent after Greece’s Hellenic Republic Asset Development Fund published calls for expressions of interest for the government’s stake in the company. Hennes & Mauritz AB (HMB), Europe’s second- largest clothing retailer, slid 5.8 percent as third-quarter profit missed analyst projections.

The Stoxx Europe 600 Index added 0.3 percent to 271.65 at the close of trading. European shares have rallied 8.2 percent so far this quarter, heading for the biggest quarterly advance since 2009. The gauge has jumped 16 percent from this year’s low on June 4 as European Central Bank policy makers agreed on an unlimited asset-purchase program and the Federal Reserve announced a third round of quantitative easing.

“The market is higher on speculation swirling that China will announce a large stimulus package after China National Day on Oct. 1,” said Stephane Ekolo, chief European strategist at Market Securities in London.

The benchmark index declined yesterday as Spaniards protested against austerity and Federal Reserve Bank of Philadelphia President Charles Plosser said the third round of bond buying may fail to stimulate growth in the U.S.

National benchmark indexes climbed in 14 of the 18 western- European markets. France’s CAC 40 rose 0.7 percent, while the U.K.’s FTSE 100 and Germany’s DAX both gained 0.2 percent. Spain’s IBEX 35 fell 0.2 percent.

China Stimulus

A report showed China’s industrial profits fell for a fifth month, increasing speculation the government will do more to support economic growth. China may further cut banks’ reserve requirements or interest rates if external demand worsens, Chen Yulu, an academic adviser to the People’s Bank of China, told reporters in Beijing.

“Although it remains unclear what type of supportive measures Chinese policy makers have in mind, the mere hint of further stimulus to underpin the world’s second-largest economy is helping lift sentiment across the board,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in e-mailed comments.

Spanish Budget

Spain’s cabinet today approved the budget for 2013. Prime Minister Mariano Rajoy has vowed to cut the deficit by at least 18 billion euros ($23.1 billion) next year, defying tens of thousands of demonstrators who fought with police in Madrid this week to demand the premier reverse course and resign.

Rajoy is struggling to persuade European peers, voters and investors that he can tackle the crisis. Spanish bond yields surged yesterday amid rising investor uncertainty over whether he will ask for external aid.

In the U.S., total orders for durable goods, those meant to last at least three years, plunged 13 percent, the most since January 2009, the Commerce Department reported today in Washington. The median forecast of 79 economists in a Bloomberg News survey was for a 5 percent decrease.

Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week. Applications for jobless benefits decreased 26,000 to 359,000 in the week ended Sept. 22, the lowest since July, Labor Department figures showed today. Economists forecast 375,000 claims, according to the median estimate in a Bloomberg survey.

The economy in the U.S. grew less than previously forecast in the second quarter. The world’s largest economy expanded at a 1.3 percent pace after growing at a 2 percent rate from January through March. The revision, the third estimate for the quarter, compared with a prior estimate of 1.7 percent and a Bloomberg survey’s 1.7 percent median forecast.

Credit Agricole

Credit Agricole advanced 3.8 percent to 5.49 euros after Chief Executive Officer Jean-Paul Chifflet said it may sell its Emporiki Greek unit within weeks.

HSBC Holdings Plc (HSBA) climbed 1 percent to 579.5 pence, making the second-biggest contribution to the Stoxx 600’s gain, while Raiffeisen Bank International AG (RBI) rose 3.5 percent to 28.86 euros.

Opap jumped 3 percent to 4.17 euros. Greece called a tender to sell a 33 percent stake in the country’s largest gambling company, as its steps up its state-asset sales program.

Bidders have until Oct. 19 to register an interest and selected investors will be invited to submit binding offers in the second and final phase of the tender, according to a Hellenic Republic Asset Development Fund announcement published in Kathimerini newspaper today.

Teleperformance Gains

Teleperformance SA, a French operator of call centers, rallied 2.6 percent to 22.31 euros as it said it’s in an “acquisition mood” and looking for targets in the U.S. to bolster growth.

Separately, Exane BNP Paribas raised its price estimate for the stock by 17 percent to 28 euros.

H&M slid 5.8 percent to 232.20 kronor, the biggest drop since May 4, after it reported third-quarter profit that trailed analysts’ estimates. Net income was 3.62 billion kronor ($550 million) in the three months ended Aug. 31, the Stockholm-based company said today. The average projection of analysts compiled by Bloomberg was 4.05 billion kronor.

European carmakers were among the worst performers of the 19 industry groups in the Stoxx 600 after Volkswagen AG (VOW) said some competitors risk going out of business without financial assistance as the region’s auto market worsens.

Volkswagen, Europe’s largest automaker, lost 2.1 percent to 143.30 euros and Fiat SpA dropped 2.1 percent to 4.23 euros.

Colruyt Falls

Colruyt SA (COLR) tumbled 5.1 percent to 34.54 euros. Belgium’s biggest discount food retailer said late yesterday that its fiscal full-year net income will be comparable to last year’s 342.9 million euros, missing analysts’ estimates for 358 million euros.

Swatch Group AG, the world’s biggest watchmaker, slipped 2 percent to 374.50 Swiss francs. Chief Executive Officer Nick Hayel said the company will have to “fight” to meet its 8 billion-franc sales goal this year, Reuters reported.

Phoenix Mecano AG (PM) slumped 6.4 percent to 453.75 francs after the maker of plastic and metal boxes for electronic goods cut its 2012 earnings before interest and taxes forecast to between 32 million euros and 37 million euros.

Subsea 7 SA (SUBC), a provider of offshore oilfield services, slid 2.9 percent to 132.80 kroner after saying it would seek to sell as much as $700 million in convertible bonds.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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

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