European Stocks Rise Amid U.S. Budget Optimism
European stocks rose for the first time in four days as U.S. President Barack Obama changed his position on tax increases, leading to optimism that Democrats and Republicans will agree on a compromise budget.
BHP Billiton Ltd. (BHP) climbed 1.2 percent as mining companies gained after China’s policy makers set their economic-growth target at 7.5 percent for next year. Banco Santander SA (SAN) and UBS AG (UBSN) gained 2.2 percent and 1.9 percent, respectively, as the shares of lenders rose. Ratos AB (RATOA) tumbled 5.1 percent after saying it will pay a smaller dividend this year.
The Stoxx Europe 600 Index added 0.5 percent to 280.46 at the close of trading. The equity benchmark has rallied 15 percent this year, its first annual gain since 2010, as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases.
“It looks like the U.S. budget talks are getting better and better,” said Pierre Mouton, who helps oversee $6 billion as portfolio manager at Notz Stucki & Cie. in Geneva. “We’re not quite there yet, but both camps seem to be trying to get to an agreement. It’s quite positive and the market’s reaction is linked to that.”
The volume of shares changing hands on the Stoxx 600 companies was 37 percent greater than the average of the last 30 days, according to data compiled by Bloomberg. On Spain’s IBEX 35 Index, the volume was more than double the average.
In the U.S., Obama, who met Republican House Speaker John Boehner at the White House yesterday, softened his stance on the budget. Obama was said to have lowered his target for new tax revenue by $200 billion, offering to increase taxes for incomes starting from $400,000 rather than $250,000.
Obama’s revised plan would raise $1.20 trillion in taxes over the next decade and cut $1.22 trillion in spending, according to a person familiar with the talks.
Lawmakers have until the end of the year to agree on measures to prevent the so-called fiscal cliff of more than $600 billion of automatic tax increases and spending cuts from coming into force in January.
In China, policy makers set their initial target for economic growth at 7.5 percent for a second year, two bank executives and a regulatory official briefed on the matter said. The government of the world’s second-largest economy also plans to keep inflation at about 3.5 percent, the people said. Chinese officials made the forecasts during their annual central economic work conference, which ended on Dec. 16.
National benchmark indexes gained in every western-European (SXXP) market except Denmark and Greece. The U.K.’s FTSE 100 gained 0.4 percent and Germany’s DAX added 0.6 percent. France’s CAC 40 rose 0.3 percent.
A gauge of commodity producers posted the biggest gain of the 19 industry groups on the Stoxx 600. BHP Billiton, the world’s largest mining company, climbed 1.2 percent to 2,150.5 pence. Rio Tinto Group, the second biggest, advanced 2.8 percent to 3,568 pence.
Santander, Spain’s largest lender, added 2.2 percent to 5.96 euros and UBS, Switzerland’s biggest, increased 1.9 percent to 15.25 Swiss francs. Banca Monte dei Paschi di Siena SpA (BMPS) rallied 3 percent to 22.3 euro cents. A gauge of banking shares contributed the most to the Stoxx 600’s advance.
Imagination Technologies Group Plc (IMG) jumped 7.1 percent to 410.9 pence. The U.K. maker of chip technology for tablets and smart phones will probably succeed in buying MIPS Technologies Inc.’s operating businesses, as Ceva Inc. hasn’t made a counter offer, JPMorgan Chase & Co. analyst Sandeep Deshpande wrote in a note. Imagination agreed to buy MIPS for $100 million yesterday.
Actelion Ltd. (ATLN) gained 1.1 percent to 45.52 francs. Patients with moderate to severe psoriasis showed improvement after taking the Ponesimod drug during a mid-stage trial, according to a statement. The Allschwil, Switzerland-based company will now proceed to the third phase of clinical development.
Ratos plunged 5.1 percent to 64.95 kronor, the biggest drop on the Stoxx 600, after the Swedish private-equity firm said in a statement it will cut its 2012 dividend to 3 kronor a share from 5.50 kronor last year.
Petroleum Geo-Services ASA (PGS) declined 1.8 percent to 95.40 kroner after the world’s third-largest seismic surveyor forecast 2013 earnings before interest, taxes, depreciation and amortization of $940 million to $980 million. The average analyst estimate had called for Ebitda of $1 billion, according to data compiled by Bloomberg.
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