Thales SA (HO) jumped 12 percent after posting better-than- estimated earnings and boosting its dividend. Mediobanca SpA and Intesa Sanpaolo led a drop in Italian shares. Royal Imtech NV plunged 12 percent after writing down assets and saying it will use the proceeds of a share sale to cut debt. Royal Bank of Scotland Group Plc (RBS) tumbled 9 percent after reporting a wider loss than analysts had estimated.
The benchmark Stoxx Europe 600 Index added 0.2 percent to 289.02 this week. The measure has gained 3.3 percent so far this year, also completing its ninth monthly increase, as U.S. lawmakers agreed on a compromise budget.
“Italian election result in one word: fiasco,” said Oliver Wallin, who helps oversee $4.4 billion as investment director at Octopus Investments Ltd. in London. “The politicians still have the potential to create problems. Having gotten ahead of themselves in the last two months, equity markets are still looking a little frothy, but the backdrop remains favorable for equities and risk assets generally.”
National benchmark indexes fell in 11 of the 18 western European markets this week. The U.K.’s FTSE 100 rose 0.7 percent, France’s CAC 40 slipped 0.2 percent and Germany’s DAX Index (DAX) climbed 0.6 percent.
Election results in Rome on Feb. 25 showed pre-election favorite Pier Luigi Bersani won the lower house by less than half a point. Former premier Silvio Berlusconi, who has vowed to reverse austerity measures, won a blocking majority in the Senate. An Italian government needs a majority in both houses.
The result may lead President Giorgio Napolitano to install an interim government to write a new election law as the prelude to another vote. Still, Italy sold 6.5 billion euros of debt at an auction on Feb. 27, meeting its maximum target.
In the U.S., orders for non-transport durable goods climbed in January by the most in 13 months, a Commerce Department report on Feb. 27 showed. Bookings climbed 1.9 percent, exceeding the 0.2 percent median forecast of economists surveyed by Bloomberg.
The Institute for Supply Management’s factory index rose more in February than analysts had estimated, a release on March 1 showed.
Faced with automatic federal spending cuts from March 1, U.S. Democrats and Republicans disagreed over how to replace the reductions totaling $1.2 trillion over nine years, $85 billion of which would occur in the remaining seven months of this fiscal year.
The European Central Bank won’t tighten monetary policy any time soon, President Mario Draghi indicated. While the ECB’s balance sheet may shrink as confidence returns to financial markets and banks repay emergency loans, policy makers are far from considering an exit from stimulus, Draghi said at an event in Munich Feb. 27.
The same day, Federal Reserve Chairman Ben S. Bernanke discussed the possibility of altering the central bank’s exit strategy by delaying asset sales. The Fed can hold bonds on its $3.1 trillion balance sheet until maturity, he said in response to questions from members of the House Financial Services Committee in Washington.
In China, the country’s official purchasing managers’ index fell to 50.1 in February from 50.4 a month earlier, the National Bureau of Statistics and China Federation of Logistics and Purchasing said. That compared with the 50.5 median estimate in a Bloomberg News survey.
In the U.K., manufacturing PMI dropped to 47.9 in February, from a revised 50.5 a month earlier, Markit Economics and the Chartered Institute of Purchasing and Supply said.
Thales SA surged 12 percent after saying it will pay a dividend of 88 euro cents a share this year, a 13 percent increase from a year earlier. The French defense-electronics company reported full-year adjusted earnings of 2.89 euros a share, beating the average analyst estimate of 2.67 euros.
Bwin.Party Digital Entertainment Plc jumped 9.8 percent and 888 Holdings Plc gained 7.1 percent. The British betting companies rallied as New Jersey Governor Chris Christie signed legislation on Feb. 27 authorizing online gambling in his state, in a bid to boost revenue at Atlantic City casinos.
Italy’s FTSE MIB Index (FTSEMIB) dropped 3.4 percent this week, the worst performing of the 24 developed markets tracked by Bloomberg. Mediobanca tumbled 14 percent and Intesa Sanpaolo slipped 7.7 percent. Telecom Italia SpA, the country’s biggest phone company, slid 7.8 percent.
Royal Imtech dropped 12 percent after saying it will use proceeds from a 500 million-euro rights offer to reduce debt. The Dutch provider of stadium infrastructure for the 2012 London Olympics also wrote down about 300 million euros on Polish and German projects.
RBS retreated 9 percent as Britain’s largest taxpayer-owned lender said 2012 loss swelled to 5.97 billion pounds from 2 billion pounds a year earlier. That was wider than the average analyst projection calling for a loss of 5.1 billion pounds.
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