UBS, Switzerland’s largest bank, rallied to a two-year high. Philips, the Dutch maker of light bulbs and electric toothbrushes, gained for an eighth day. Portugal’s PSI-20 Index (PSI20) advanced 2.3 percent as President Anibal Cavaco Silva affirmed that he doesn’t want to call early elections. Mobistar (MOBB) SA slumped the most on record after the Belgian mobile-phone company cut profit forecasts and suspended its dividend.
The Stoxx Europe 600 Index rose 0.2 percent to 300.3 at the close of trading, having swung between gains and losses at least 20 times. The gauge increased 1.2 percent last week on economic-growth data from China and assurances from the U.S. Federal Reserve that its stimulus program remains flexible.
“The Fed was able to calm markets, which has led to some strong gains,” said Andreas Nigg, head of equity and commodity strategy at Vontobel Asset Management in Zurich. “Earnings out of Europe so far look good at first glance, but it’s also important to remember that markets aren’t dirt cheap anymore.”
The Stoxx 600 has rallied 7.4 percent this year, pushing its valuation to 13.4 times estimated earnings, compared with an average ratio of 11.4 over the past three years, according to data compiled by Bloomberg. The volume of shares changing hands in Stoxx 600 companies was 24 percent lower than the average of the last 30 days, Bloomberg data show.
Companies from Apple Inc. to Ford Motor Co. are set to post earnings in the U.S. this week. About 71 percent of Standard & Poor’s 500 Index members that have reported second-quarter results so far topped analysts’ income estimates, data compiled by Bloomberg show.
National benchmark indexes fell in 10 of the 18 western European markets today. France’s CAC 40 added 0.4 percent, while the U.K.’s FTSE 100 slipped 0.1 percent and Germany’s DAX (DAX) was little changed.
UBS advanced 2.5 percent to 18.05 Swiss francs, the highest since March 2011, after reporting second-quarter net income of 690 million francs ($734 million). The company also said it reached an agreement in principle with the U.S. Federal Housing Finance Agency to settle claims related to residential mortgage-backed securities offerings between 2004 and 2007.
Philips added 2.1 percent to 23.91 euros. Earnings before interest, taxes, amortization and one-time items amounted to 530 million euros ($697 million), compared with 408 million euros a year earlier. Profit matched the average estimate of 11 analysts surveyed by Bloomberg.
Banco Espirito Santo SA and Banco Comercial Portugues SA led Portuguese shares higher, jumping 10 percent to 68.5 euro cents and 6.7 percent to 9.6 cents, respectively. Cavaco Silva said the government of Prime Minister Pedro Passos Coelho has the support of a majority in parliament and will stay in office until its term ends in 2015.
Julius Baer Group Ltd. (BAER) rallied 5.7 percent to 42.04 francs. Switzerland’s third-biggest wealth manager said increased client trading boosted margins as it integrated Merrill Lynch businesses acquired from Bank of America Corp. last year. The gross margin, which reflects how much the bank makes in revenue on managed client assets, rose to 102 basis points in the first half, from 98 basis points in the year-earlier period.
“The first-half results are strongly influenced by the integration of a significant part of the Merrill Lynch units, and therefore not comparable to the previous years,” Andreas Brun, an analyst at Zuercher Kantonalbank AG in Zurich, wrote in a report today. “The results are to be assessed positively compared to the consensus estimates.”
Royal KPN NV (KPN), the former Dutch phone monopoly, surged 13 percent to 1.80 euros as three people familiar with the matter said Telefonica SA is in advanced talks to take over its German mobile-phone business.
The companies had a pre-agreement last year to combine their German phone units before negotiations fell through, said the people, asking not to be identified because the deliberations are confidential. Talks have resumed in the past month, said one of the people. A deal, which is likely to be a cash and share transaction, could be announced as early as today, another person said.
Mobistar plummeted 31 percent to 10.92 euros, the biggest drop since its initial public offering in 1998. Belgium’s second-biggest mobile-phone company said 2013 revenue will probably fall as much as 12 percent with earnings before interest, taxes, depreciation and amortization will be at least 300 million euros.
Belgacom SA, the nation’s largest phone company, slid 5.6 percent to 16.32 euros, the lowest price since its 2004 IPO.
GlaxoSmithKline Plc declined 1.2 percent to 1,694 pence, for the biggest drag on the Stoxx 600. Abbas Hussain, the company’s head of emerging markets, said after meeting Chinese officials that some employees may have broken laws in that country. China’s Public Security Ministry last week accused Glaxo officials of economic crimes involving 3 billion yuan ($489 million) and detained four senior executives.
Scania AB (SCVB), the Swedish truckmaker that reported worse-than-estimated earnings last week, fell 5.3 percent to 134.10 kronor, the most since October 2011. UBS (UBSN) cut the stock to sell from neutral and lowered its earnings forecasts, saying truck demand in Brazil will probably fall sharply from current levels.
“The truck cycle has disconnected from the wider economy, plagued by lower growth, inflation and waning confidence,” Fredric Stahl, a UBS analyst, wrote in a note to clients today.
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