European Shares Are Little Changed as Unilever Advances

European stocks were little changed, erasing earlier gains, as a rally in food and beverage makers offset a decline in mining stocks.

Unilever gained 2.3 percent after the maker of Magnum ice cream and TRESemme shampoo reported fourth-quarter sales growth that exceeded estimates. Rio Tinto Group and BHP Billiton Ltd., the world’s biggest miners, each declined at least 1.7 percent. Alstom SA (ALO) tumbled 14 percent after the French maker of trains and power equipment reduced its operating-margin outlook.

The Stoxx Europe 600 Index climbed less than 0.1 percent to 335.76 at the close of trading, paring an earlier rally of as much as 0.6 percent. The benchmark gauge is near its highest level in six years.

“Keeping your confidence in stocks is still the wise thing to do, though you are very vulnerable if the macro picture does not improve as expected,” Dirk Thiels, who helps oversee about $88 billion as head of investment management at KBC Asset Management NV, said in an interview from Brussels. “All the boxes are being ticked for earnings growth to return this year. Valuations are getting a bit tight. We’re willing to wait until the first-quarter results but the stakes are a lot higher.”

Profit at Stoxx 600 companies will probably increase 13.4 percent on average this year, following a 5.3 percent drop in 2013, according to Bloomberg calculations based on analyst estimates. The European equity gauge climbed 17 percent last year, ending 2013 trading at 15.4 times its members’ projected earnings, the highest valuation in four years.

IMF Forecasts

The International Monetary Fund raised its forecast for global growth this year as expansions in the U.S. and the U.K. accelerate. The economy will grow 3.7 percent, compared with an October estimate of 3.6 percent, the IMF said.

German data showed investor confidence slipped in January after gaining for five straight months. The ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 61.7 from 62 in December. That missed the median economist estimate for an increase to 64.

National benchmark indexes fell in 10 of the 18 western-European markets. The U.K.’s FTSE 100 dropped less than 0.1 percent. France’s CAC 40 Index increased less than 0.1 percent, and Germany’s DAX rose 0.2 percent.

Unilever Sales

Unilever (UNA) gained 2.3 percent to 29.49 euros in Amsterdam after saying fourth-quarter sales excluding acquisitions and currency fluctuations rose 4.1 percent, beating the median analyst estimate that called for a 3.9 percent increase.

A gauge of food and drink stocks in the Stoxx 600 rose 1.2 percent to its highest level since May. Danone, the world’s largest yogurt maker, added 2.1 percent to 52.11 euros. Pernod Ricard SA advanced 3.7 percent to 84.25 euros.

Wirecard AG jumped 5.2 percent to 32.12 euros, the highest price since its October 2000 initial public offering. The provider of software for electronic payments said sales increased to 482.2 million euros ($652.6 million) last year, while earnings before interest, taxes, depreciation and amortization rose 15 percent to 126 million euros. The company predicted “strong growth in all core markets” for 2014.

Henkel AG increased 2 percent to 85.35 euros, its highest price since at least August 1992. The German maker of Schwarzkopf hair products and Loctite glue said it will increase its dividend payout to as much as 35 percent of net income. The company had previously paid out about 25 percent.

PSA Peugeot Citroen SA advanced 2 percent to 10.41 euros after sinking 11 percent yesterday. Europe’s second-biggest carmaker is considering a capital increase of 3 billion euros. Dongfeng Motor Corp. may first contribute funding through a sale reserved for Peugeot’s Chinese partner, with a rights offering to follow that Dongfeng would participate in, the Paris-based automaker said in a statement late yesterday. The French state may also buy shares in both sales, Peugeot said.

Mining Shares

Rio Tinto fell 3.1 percent to 3,231.5 pence and BHP slid 1.7 percent to 1,854.5 pence. A gauge of Stoxx 600 mining stocks fell the most among 19 industry groups today.

Alstom tumbled 14 percent to 23.93 euros after cutting its forecast for operating margins for the second time in nine months because of weaker-than-expected sales of thermal-power equipment. The operating margin will remain at about 7 percent in the year ending in March and may drop next year, the company based near Paris said. Third-quarter sales fell to 4.8 billion euros, lower than the estimated 5.06 billion euros.

Royal DSM NV lost 10 percent to 51 euros. The world’s largest vitamin maker said it is taking a “prudent approach” to business this year because of doubts over the economy. DSM said full-year earnings before interest, taxes, depreciation and amortization rose to 1.31 billion euros from 1.11 billion euros a year earlier.

To contact the reporters on this story: Cecile Vannucci in London at cvannucci1@bloomberg.net; Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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

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