European Stocks Climb on Spain Debt Rating, U.S. Housing
European stocks rose for a third day, the longest winning streak in five weeks, as Moody’s Investors Service kept its investment-grade debt rating on Spain and U.S. new-home construction surged to a four-year high.
Bankia led a rally in Spanish banks, jumping 19 percent. Waertsilae Oyj soared 8.1 percent as the world’s largest maker of ship engines and power plants raised its forecasts. PSA Peugeot Citroen advanced 4.1 percent as Le Figaro said the French government and banks may bail out the automaker’s credit unit. Danone SA sank the most in two months as the food company reported revenue growth that missed analysts’ estimates.
The Stoxx Europe 600 Index (SXXP) rose 0.5 percent to 275.66 at the close of trading, the highest level in three weeks. The gauge has rallied 18 percent from its 2012 low on June 4 as European Central Bank policy makers agreed on an unlimited bond- buying program and the Federal Reserve unveiled a third round of quantitative easing.
“There appears to be positive news regarding Spain,” said Jakup Petur Baerentsen, a chief equity adviser at Nordea Private Bank in Copenhagen. “The market has consolidated and we think that it will continue upwards.”
National benchmark indexes rose in 16 of the 18 western European markets. The U.K.’s FTSE 100 (UKX) gained 0.7 percent, Germany’s DAX increased 0.3 percent and France’s CAC 40 climbed 0.8 percent. Spain’s IBEX 35 surged 2.4 percent.
Moody’s kept an investment-grade credit rating on Spain late yesterday, citing a reduction in the risk of losing market access because of the ECB’s willingness to buy the nation’s debt. Moody’s assigned a negative outlook on the country’s Baa3 sovereign debt, one step above junk, as it concluded the review for a possible further downgrade of its rating that it had initiated in June.
Spain avoided joining Cyprus, Portugal, Ireland and Greece in being rated below investment grade. S&P has a negative outlook on its BBB- rating, also one step above junk, and Fitch Ratings has Spain at BBB, two levels higher than junk.
New-home construction in the U.S. surged in September to the highest level in four years. Starts jumped 15 percent to an 872,000 annual rate last month, the most since July 2008 and exceeding all forecasts in a Bloomberg survey of economists, Commerce Department figures showed today. The median estimate of 81 economists surveyed called for a reading of 770,000.
In the U.K., jobless claims unexpectedly fell in September and a wider measure of unemployment dropped to the lowest rate in more than a year as the London Olympics helped push employment to a record.
Bank of England policy makers split on the need for more stimulus, according to minutes of the Monetary Policy Committee’s Oct. 3-4 meeting published today.
Bankia jumped 19 percent to 1.24 euros, the biggest gain in two months, to lead Spanish banks higher. Banco Santander SA (SAN), the nation’s biggest lender, climbed 3.8 percent to 6.13 euros, a one-month high.
Waertsilae soared 8.1 percent to 29.02 euros in Helsinki, the biggest increase since November. The company reported third- quarter earnings that exceeded estimates and boosted its full- year sales-growth forecast.
Peugeot climbed 4.1 percent to 6.03 euros. Banks may delay the repayment of 4 billion euros ($5.3 billion) in loans from Peugeot’s credit division, Banque PSA Finance, Le Figaro reported, without saying where it got the information. The automaker is examining funding options for the unit, said Jean- Baptiste Mounier, a spokesman for Peugeot. (UG)
Royal Bank of Scotland Group Plc rose 2.2 percent to 286.1 pence as Britain’s biggest government-owned bank agreed to exit the U.K.’s Asset Protection Scheme after paying 2.5 billion pounds ($4 billion) to the government to insure its most risky assets. RBS was in 2009 the only lender to join the program, which covered potential losses on 282 billion pounds of loans and derivatives. RBS never had to draw on the policy.
Cable & Wireless Communications Plc (CWC) gained 3.6 percent to 37.5 pence as the company said it’s in talks to sell its 51 percent stake in Cia. de Telecomunicacoes de Macau, S.A.R.L. to China’s Citic Pacific Ltd.
Alcatel-Lucent SA (ALU) climbed 7 percent to 80 euro cents. France’s biggest phone-equipment supplier said its China unit, Alcatel-Lucent Shanghai Bell, won a contract to deploy the largest share of China Mobile’s new TD-LTE trial network rollout as it extends services to 10 cities.
Eurasian Natural Resources Corp., a Kazakh metals producer, added 7.3 percent to 352.2 pence and Lonmin Plc (LMI), the third- biggest platinum producer, jumped 6 percent to 520.5 pence. A gauge of basic-resources companies gained the most among the 19 industry groups in the Stoxx 600.
Danone (BN) dropped 3 percent to 47.33 euros, the largest decrease since Aug. 2. The world’s biggest yogurt maker reported third-quarter revenue growth that missed analysts’ estimates as sales of dairy products in Spain and Italy fell. Revenue adjusted for acquisitions, divestments and currency swings rose 5 percent, the Paris-based company said, trailing the 6.1 percent average of 15 forecasts.
ASML (ASML) Holding NV dropped 5.3 percent to 39.15 euros as Europe’s biggest semiconductor-equipment maker forecast fourth- quarter sales of about 1 billion euros, trailing estimates of 1.16 billion euros. The company’s gross-margin outlook was 41 percent, compared with a 42.6 percent estimate. Separately, ASML agreed to buy Cymer Inc. for 1.95 billion euros.
U.S. technology companies Intel Corp. and International Business Machines Corp. fell in New York trading. The world’s largest chipmaker forecast fourth-quarter gross margins that missed analysts’ estimates and the biggest computer-services provider reported third-quarter revenue that fell short of projections.
TeliaSonera AB (TLSN), Sweden’s biggest phone company, slipped 1.6 percent to 45.40 kronor after it reported third-quarter earnings that missed analysts’ projections because of slowing sales in the Nordic region.
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