European Stocks Gain Amid Speculation of Greek Aid Deal
European stocks rose for a second day amid speculation the region’s finance ministers will agree on a Greek financing deal and optimism Israelis and Palestinians will sign up to a cease-fire in Gaza.
EasyJet Plc (EZJ) jumped to the highest level in five years, leading travel shares higher, after the budget airline doubled its dividend. Xstrata Plc (XTA) and Glencore International Plc (GLEN) advanced as investors approved their $31 billion merger. Credit Suisse Group AG (CSGN) paced a decline in financial shares, dropping 1.7 percent on plans to reorganize its investment bank.
The Stoxx Europe 600 Index (SXXP) added 0.3 percent to 269.49 at the close of trading, extending yesterday’s 2.2 percent jump to reach a one-week high. The gauge, which fluctuated between gains and losses at least 10 times today, has rallied 15 percent from a June 4 low as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases.
“The market has rebounded on talk that there will be a cease-fire in Israel,” said Stephane Ekolo, chief European strategist at Market Securities, in London. “There also is the possibility of a resolution regarding Greek debt in tonight’s meeting and that is helping stocks.”
European finance ministers are discussing ways to fill a 15 billion-euro ($19.2 billion) gap in Greece’s public accounts at a meeting in Brussels today. The options under consideration include recycling ECB profits on Greek bonds, charging Greece lower interest rates and extending repayment deadlines.
Last week, European leaders granted Greece two more years to cut its budget deficit. The required extra financing resulted in a clash with the International Monetary Fund, since it would add to Greece’s debt load instead of reducing it.
“There are good chances that we will come to a conclusive mutual solution, but I can’t be entirely sure,” Luxembourg Prime Minister Jean-Claude Juncker told reporters before chairing the meeting.
International efforts to end a week of fighting between Israel and Palestinian groups in the Gaza Strip will succeed within hours, according to Egyptian President Mohamed Mursi. What he termed Israeli aggression against the territory will end today, the state-run Middle East News Agency reported.
In the U.S., Fed Chairman Ben S. Bernanke is scheduled to address the Economic Club of New York at 12:15 p.m. local time. Investors are speculating the central bank, which has its next policy meeting Dec. 11-12, will increase bond purchases to spur the economy.
U.S. housing starts unexpectedly climbed 3.6 percent to a four-year high in October. Builders broke ground on 894,000 homes at an annual rate after a 863,000 pace in September, Commerce Department figures showed. The median estimate of 82 economists surveyed by Bloomberg called for 840,000 starts.
EasyJet rallied 6.1 percent to 692 pence, the highest price since November 2007, after increasing its annual dividend to 21.5 pence from 10.5 pence. The discount airline carrier said pretax profit for the year ended Sept. 30 was 317 million pounds ($504 million), compared with an average analyst estimate of 314 million pounds.
Xstrata advanced 3.1 percent to 986.6 pence and Glencore added 1.6 percent to 331.75 pence as Glencore’s $31 billion takeover of Xstrata was approved by investors, leaving clearance by regulators in Europe and China as the remaining hurdles for this year’s biggest deal.
Shareholders voted in favor of a resolution to approve Glencore’s offer without retention payments for about 70 Xstrata managers and then rejected the bonus packages in a separate ballot, ensuring the deal proceeds, Xstrata said.
Credit Suisse retreated 1.7 percent to 21.19 Swiss francs in Zurich after saying it will reorganize its investment bank and merge asset management with the private bank to cut costs and reduce complexity.
Fiat SpA (F) dropped 5 percent to 3.31 euros. UBS AG lowered its recommendation on the Italian automaker to neutral from buy, saying it may need to raise between 1.6 billion euros and 2.9 billion euros to finance the purchase of the remaining shares in Chrysler Group LLC.
Royal Imtech NV (IM), the Dutch provider of infrastructure for stadiums in this year’s European soccer championship and London Olympics, tumbled 11 percent to 15.68 euros, the biggest drop in more than four years. ABN Amro Bank NV downgraded the shares to sell from buy, saying the company could breach a banking covenant this year.
Lonmin Plc (LMI) soared 13 percent to 310.7 pence, the biggest gain since March 2009. The world’s third-largest platinum producer jumped 9.3 percent yesterday after winning support from shareholders for a $817 million stock sale aimed at helping it avoid breaching pledges to creditors.
Accor SA (AC) rallied 3.4 percent to 24.71 euros as Exane BNP Paribas said the hotelier’s profit margins could reach 16 percent to 18 percent by 2016, from 9.5 percent at present.
Swatch Group AG (UHR) increased 1.5 percent to 433.10 francs as the Federation of the Swiss Watch Industry said watch exports rose 13 percent last month from a year earlier. Cie. Financiere Richemont SA, the owner of the Cartier brand, advanced 1.9 percent to 68.50 francs.
Tele2 AB (TEL2B) climbed 1.6 percent to 114 kronor, a second day of gains. The Swedish telecommunications company may get control of a mobile-phone joint venture with Russia’s OAO Rostelecom, Vedomosti reported, citing an unidentified person familiar with the matter.
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