European Stocks Advance Before Fed Bond-Buying Decision

Photographer: Ralph Orlowski/Bloomberg

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Photographer: Ralph Orlowski/Bloomberg

A trader passes an electronic display board as he enters the trading floor at the Frankfurt Stock Exchange in Frankfurt.

European stocks rose, rebounding from yesterday’s decline, as investors waited for the Federal Reserve to decide whether to reduce its monthly asset purchases.

TUI AG advanced 3.8 percent after unexpectedly posting a full-year profit. Centrica Plc added 1.7 percent after pledging to return the proceeds from an asset sale to shareholders. Technip SA retreated to its lowest price in more than two years after saying it expects a weaker profit margin at its subsea division next year.

The Stoxx Europe 600 Index added 0.9 percent to 313.99 at the close of trading in London. The gauge has still fallen 3.4 percent from this year’s high on Nov. 28 as better-than-estimated U.S. economic data led some investors to speculate the Fed will decide to slow bond purchases at today’s meeting.

“We will probably see Fed tapering as a gradual process rather than a dramatic change,” Hugh Cuthbert, who helps manage about $1 billion at SVM Asset Management Ltd. in Edinburgh, said by phone. “When markets go up a lot, people look for excuses to take profits. If the U.S. economy is improving and the hands on the till are doing the tapering in a measured way, then that’s good news.”

About 34 percent of economists surveyed by Bloomberg on Dec. 6 predicted that the U.S. central bank will decide to reduce its $85 billion monthly bond-buying program after European markets close today.

National benchmark indexes rose in 14 of the 18 western-European markets. The U.K.’s FTSE 100 Index increased 0.1 percent, France’s CAC 40 added 1 percent and Germany’s DAX jumped 1.1 percent.

TUI, Centrica

TUI gained 3.8 percent to 11.68 euros as Europe’s biggest tour operator posted net income of 4.3 million euros ($5.9 million) for the financial year that ended on Sept. 30. The average analyst estimate had called for a loss. The company predicted that sales will climb next year as its TUI Travel Plc business attracts more customers. TUI Travel added 1.1 percent to 396 pence in London trading.

Centrica climbed 1.7 percent to 328.7 pence. The energy supplier said it will extend its share-buyback program next year after subsidiary Direct Energy agreed to sell its gas-fired power stations in Texas to Blackstone Group LP for $685 million.

Electrolux AB (ELUXB) rose 3.5 percent to 159.50 kronor as UBS AG upgraded the home-appliances maker to buy from neutral. The brokerage cited the shares’ recent decline. The stock tumbled 20 percent from this year’s high on Aug. 2 through yesterday’s close. UBS also said that renewed economic growth in the euro area in 2014 would benefit the maker of dishwashers.

Vestas Advances

Vestas Wind Systems A/S climbed 5.3 percent to 153 kroner after saying it received an order from Enel Green Power SpA for wind turbines to produce 350 megawatts of power. The Danish manufacturer said that the customer may order turbines capable of producing a further 636 megawatts of electricity.

Bwin.Party Digital Entertainment Plc advanced 8.4 percent to 125.4 pence after forecasting a margin on earnings before interest, taxes, depreciation, amortization and some items of 16 percent to 17 percent in 2013. The company said it remained positive on its outlook for 2014, citing new products, prospects for further growth in the U.S. and greater betting volumes during next year’s FIFA World Cup.

Endesa SA (ELE) jumped 7.1 percent to 22.16 euros after saying it will pay a gross dividend of 1.50 euro a share for 2013. The consensus analyst estimate had called for 38 euro cents a share, according to Kepler Cheuvreux.

Technip, GlaxoSmithKline

Technip slid 6.3 percent to 62.80 euros, the largest decline on the Stoxx 600. The French oilfield-services company said late yesterday that the operating margin for its subsea division will drop to about 5 percent before recovering to at least 12 percent next year. It has forecast a 14 percent margin for the unit in 2013. Peer Subsea 7 SA dropped 2.8 percent to 109.40 kroner in Norway.

GlaxoSmithKline Plc (GSK) retreated 1.1 percent to 1,548.5 pence. Vectura Group Plc said its asthma inhaler, a generic version of Glaxo’s Advair, has won its first approval from a regulator in a European Union country. Advair generated 20 percent of Glaxo’s sales in 2012.

Vectura jumped 13 percent to 137.3 pence, its highest price since the drugmaker’s initial public offering in 2004. Vectura’s partner Sandoz obtained approval to market the inhaler in Denmark. Novartis, which owns the Sandoz generic-drugs division, climbed 1 percent to 68.45 Swiss francs.

Marks & Spencer

Marks & Spencer (MKS) Group Plc slipped 2.4 percent to 441.5 pence. UBS downgraded the retailer to neutral from buy, citing lower gross margins. Debenhams Plc (DEB) lost 4.3 percent to 78.5 pence as the brokerage cut its 12-month price forecast to 100 pence from 125 pence.

“Clothing retailers look to have pressed the panic button this year as subdued real disposable income, weak footfall and warmer October weather have held back full-price sales,” analysts Andrew Hughes and Adam Cochrane wrote in a note.

Sainsbury Plc declined 3.6 percent to 365.1 pence after Deutsche Bank AG said it expects the grocer’s same-store sales to stagnate in the third quarter of its financial year. The brokerage had forecast they would increase 1.5 percent.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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