European stocks advanced for a second day, after the Stoxx Europe 600 Index posted its first full-weekly gain of 2014, as a global banking-supervision body eased rules linked to minimum-capital requirements for lenders.
A gauge of banking shares climbed to its highest level since April 2011 after the Basel Committee on Banking Supervision’s announcement on capital requirements. UBS (UBSN) AG added 3.1 percent as Chief Executive Officer Sergio Ermotti said the lender won’t spin off its investment-banking business. ICAP (IAP) Plc fell 1.1 percent as Goldman Sachs Group Inc. downgraded the world’s biggest interdealer broker.
The Stoxx 600 climbed 0.2 percent to 330.72 at the close of trading. The benchmark gained 0.7 percent last week as investors weighed data that showed the U.S. unemployment rate unexpectedly fell in December even as hiring slowed.
“Banks have got a lift from the Basel discussions as some investors will see the risk lowering in bank holdings, but overall, everybody is waiting for the outcome of corporate news from America,” Herbert Perus, who helps oversee about $36 billion as head of equities at Raiffeisen Capital Management in Vienna, said in a telephone interview.
Earnings for companies in the S&P 500 will climb 9.5 percent on average this year, almost twice the rate of 2013, according to the latest analyst estimates compiled by Bloomberg.
The Basel Committee adjusted proposals for the calculation of lenders’ leverage ratio, which sets a minimum standard for how much capital needs to be held as a percentage of all assets, after warnings from banks that the original rule would penalize low-risk financial activities and curtail lending.
The changes will give lenders more scope in calculating the ratio, as well as easing proposals on how they determine the size of their off-balance sheet activities, the committee said following a meeting in the Swiss city yesterday.
A measure of bank-related stocks posted the best performance of the 19 industry groups in the Stoxx 600. Deutsche Bank AG and Commerzbank AG, Germany’s largest lenders, advanced 4.7 percent to 38.57 euros and 5.5 percent to 13.69 euros, respectively. Barclays Plc, the U.K.’s second-biggest bank by assets, climbed 2.9 percent to 291.7 pence.
UBS added 3.1 percent to 18.76 Swiss francs. Ermotti refuted a report by Mediobanca SA analysts last week that Switzerland’s biggest lender may dispose of the investment-banking business as higher capital requirements from regulators thwart efforts to boost returns.
“We are not considering that option,” Ermotti, 53, said in an interview with Stephen Engle on Bloomberg Television in Shanghai today. “We have very defined assets and capital that we want to put at work in the investment bank, and the business model works. Therefore, there is no necessity for us to make changes.”
Suedzucker AG jumped 11 percent to 21.59 euros, its biggest gain since October 2008, after reiterating its full-year forecasts. The maker of sugar, starch and bakery additives predicted revenue for 2014 of about 7.6 billion euros ($10.4 billion) and operating profit of about 650 million euros.
Alcatel-Lucent SA (ALU) advanced 5.1 percent to 3.27 euros. The French network-equipment maker is in talks to sell its enterprise business to potential buyers including Unify GmbH, a venture of Gores Group LLC and Siemens AG, according to three people familiar with the matter. The unit may be valued at as much as 250 million euros, one of the people said.
Debenhams Plc (DEB) rose 5 percent to 85.7 pence as Sports Direct International Plc acquired a 4.63 percent stake in the U.K.’s second-largest department store chain. Sports Direct said it wants to work with Debenhams at an operational level.
Continental AG gained 1.2 percent to 159.95 euros. Europe’s second-largest auto parts maker forecast a fifth consecutive year of record sales after deliveries of parking-assistance and braking electronics helped revenue rise 1.7 percent in 2013.
Sales this year will jump 5 percent to 35 billion euros, Continental said. Adjusted earnings before interest and taxes in 2013 totaled 3.7 billion euros, or 11.2 percent of sales, beating its forecast of at least a 10.5 percent margin.
PSA Peugeot Citroen SA (UG) advanced 7.8 percent to 10.80 euros, its biggest gain since July. Sanford C Bernstein & Co. upgraded the French carmaker to outperform, similar to a buy rating, from market perform, citing its strong engineering and product range and its investment in new technology.
ICAP retreated 1.1 percent to 451.9 pence, paring earlier losses of as much as 2.7 percent. Goldman Sachs cut its rating on the shares to sell from neutral. The broker cited weak transaction volumes relating to uncertainty about changes to the rules for swap execution facilities, or Sefs, due to be implemented this year under the U.S.’s Dodd-Frank Act.
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