European stocks climbed this week as Moody’s Investors Service reiterated its investment-grade debt rating on Spain following a review and U.S. reports on retail sales, manufacturing and house building beat estimates.
ArcelorMittal advanced 9.8 percent after a report said the steelmaker is considering the sale of a minority stake in its Canadian iron-ore unit. Remy Cointreau SA (RCO) slumped 9.3 percent after France’s second-biggest distiller posted an improvement in first-half sales that trailed analysts’ projections.
The Stoxx Europe 600 Index (SXXP) climbed 1.7 percent to 274.08 this past week, after dropping 1.7 percent the previous week. The equity benchmark has rallied 17 percent from this year’s low on June 4 as European Central Bank policy makers approved an unlimited bond-buying program and the Federal Reserve announced a third round of quantitative easing.
“The rating assessment of Spain at the beginning of the week certainly gave the market a positive shove,” said Christian Zogg, who manages about $540 million as head of equity and fixed income at LLB Asset Management AG in Vaduz, Liechtenstein. “The U.S. data turned out to be good news as well. The market may hold rather well until the end of the year; one just needs to endure the volatility.”
National benchmark indexes gained in every western-European market except Norway and Iceland this past week. Germany’s DAX advanced 2 percent, while the U.K.’s FTSE 100 added 1.8 percent. France’s CAC 40 and Spain’s IBEX 35 each rallied 3.4 percent.
Moody’s decided against removing Spain’s investment-grade credit rating on Oct. 16. The ratings company said that the risk of the country losing access to credit markets has fallen because the ECB now has the power to buy its debt. Moody’s assigned a negative outlook on Spain’s bonds as it concluded a review that it began in June.
Cyprus, Portugal, Ireland and Greece all have ratings below investment grade. S&P has a negative outlook on its BBB- rating for Spain, while Fitch Ratings has given the country a BBB score, which is two levels higher than junk.
European Union leaders agreed on a timetable to introduce common regulation of the euro area’s 6,000 lenders by Jan. 1 2014. At a two-day summit, the 27 member states decided to put in place the framework for a single regulator by the end of this year. The ECB will move to oversee all the banks in the currency area in stages next year.
In the U.S., a Commerce Department report on Oct. 15 showed that retail sales climbed 1.1 percent in September, beating the median economist forecast for a 0.8 percent gain. Sales increased a revised 1.2 percent in August.
A separate U.S. release on Oct. 17 showed that house building surged last month to the highest level in four years. Starts jumped 15 percent to an annual rate of 872,000, the most since July 2008 and more than every forecast in a Bloomberg survey of economists. The median estimate of 81 economists polled by Bloomberg had called for a reading of 770,000.
A measure of manufacturing in the Philadelphia region, published on Oct. 18, jumped to 5.7 this month. That beat the median analyst forecast for a reading of 1.
Bankia SA surged 12 percent, leading gains in a gauge of European lenders this past week to post the best performance as a group. Banco Bilbao Vizcaya Argentaria SA rose 8.7 percent and Banco Espirito Santo SA climbed 12 percent.
ArcelorMittal advanced 9.8 percent as the Financial Times reported on Oct. 18 that the world’s biggest steelmaker is considering the sale of a minority stake, possibly 30 percent, in its Canadian iron-ore unit. The newspaper cited unidentified people familiar with the matter. The unit may be valued at $8 billion to $10 billion, the FT said.
Douglas Holding AG jumped 7.9 percent after Advent International Corp. made a 1.5 billion-euro ($2 billion) bid for the retailer.
Advent made an offer of 38 euros per share for the German retailer via investment vehicle Beauty Holding Three AG. The retailer’s three largest shareholders have a binding commitment to accept the bid, Advent said.
Waertsilae Oyj soared 13 percent as the maker of ship engines and power plants reported third-quarter net income that exceeded estimates and raised its full-year sales-growth forecast.
Wincor Nixdorf AG, Europe’s biggest maker of automated teller machines, increased 11 percent on speculation that its new open-source technology platform will lead to more profitable mobile-payment systems.
Remy Cointreau dropped 9.3 percent. Organic revenue rose 13 percent in the six months through September, the company said on Oct. 18. That missed the median estimate of nine analysts for an 18 percent gain. Revenue climbed 5.3 percent in the second quarter. It had surged 24 percent in the first three months of the fiscal year.
Man Group Plc slumped 10 percent. The world’s biggest publicly traded hedge-fund manager said outflows increased 57 percent in the third quarter.
“Investor sentiment and -- consequently -- the outlook for flows continues to be subdued,” Chief Executive Officer Peter Clarke said in a statement on Oct. 18.
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