Europe Stocks Advance First Time in Three Days Before Fed

European stocks rose, after two days of declines amid turmoil in Iraq, as investors awaited a Federal Reserve policy decision.

Shire Plc climbed to a record after a report said it has hired Citigroup Inc. as it may receive takeover offers. Whitbread Plc (WTB) added 2.2 percent after sales at its Premier Inn hotels and Costa Coffee chain topped analysts’ estimates. A.P. Moeller-Maersk A/S fell 5.3 percent after China blocked the formation of a global alliance by the world’s three biggest shipping lines.

The Stoxx Europe 600 Index added 0.3 percent to 346.42 at the close of trading in London. The benchmark gauge closed at its lowest level since June 5 yesterday as Sunni insurgents made further territorial gains in Iraq.

“People are looking at the situation there and watching for implications on a global view and comments made by politicians on military intervention,” Jamie Cole, a sales trader at CMC Markets Plc in London, said by telephone, referring to the situation in Iraq. “We have the FOMC meeting, which will be a focus.”

The Stoxx 600 fell 1.2 percent from a six-year high on June 10 through yesterday. Fighters from an al-Qaeda breakaway group clashed with Iraqi government forces near Baghdad as U.S. President Barack Obama is considering air strikes.

In the U.S., Fed policy makers start their two-day meeting today. The central bank will reduce its asset-purchase program by $10 billion for a fifth straight month, bringing it to $35 billion, according to the median of 43 economists’ estimates compiled by Bloomberg.

Economic Data

The Stoxx 600 pared an earlier gain of as much as 0.4 percent after a report that German investor confidence unexpectedly fell for a sixth month. The ZEW Center for European Economic Research’s index of investor and analyst expectations dropped to 29.8 in June from 33.1 in May. The median economist forecast was for an increase to 35. The gauge aims to predict economic developments six months in advance.

A Commerce Department report showed the number of housing starts in the U.S. dropped to a 1 million annualized rate in May from 1.07 million in April. That matched the median economist estimate. Permits, a proxy for future construction, decreased.

National benchmark indexes advanced in 13 of the 17 western-European market that were open today. France’s CAC 40 climbed 0.6 percent. Germany’s DAX increased 0.4 percent, while the U.K.’s FTSE 100 gained 0.2 percent. Markets in Iceland were closed for a holiday.

The number of shares changing hands in Stoxx 600-listed companies was 9 percent lower than the 30-day average, according to data compiled by Bloomberg.

Overshadow Things

“We’re coming to a quiet period with summer time around the corner,” CMC Markets’ Cole said. “It wouldn’t surprise me if equities stayed around where they are, but Iraq could overshadow things.”

Shire increased 3.5 percent to 3,660 pence. The pharmaceutical company has hired Citigroup as it may receive offers following spate of deals in the industry, Reuters reported, citing people familiar with the matter.

Whitbread rose 2.2 percent to 4,259 pence. Comparable sales at Premier Inn jumped 9.5 percent in the first quarter, topping analysts’ projections that called for a 7 percent gain. They climbed 4.5 percent at Costa, exceeding estimates of 4 percent.

Rheinmetall AG added 2.5 percent to 50.92 euros. The German automotive and defense-equipment supplier was boosted to buy from hold at Berenberg Bank. Orders from international customers will bolster sales at the company’s defense division, while the automotive business will continue to benefit from growth in global auto production, according to Berenberg.

Maersk Alliance

Maersk lost 5.3 percent to 13,290 kroner. The Chinese Ministry of Commerce said on its website that the proposed P3 vessel-pooling accord, which also included Mediterranean Shipping Co. and CMA CGM SA, would curb competition on the busiest Asia-Europe routes.

Ashtead Group Plc (AHT) dropped 6.3 percent to 831.5 pence. The U.K. building-equipment rental company posted full-year revenue of 1.6 billion pounds ($2.7 billion), matching analysts’ projections. Ashtead reported net debt of 1.15 billion pounds as of April 30, compared with 1.01 billion pounds a year earlier.

Subsea 7 SA (SUBC) retreated 2.2 percent to 124 kroner. Berenberg cut shares of the offshore oil-services provider to hold from buy, saying its order backlog will decline after it lost project opportunities in West Africa to rivals in the past year. Natixis SA also cut its rating on the London-based company to neutral from buy.

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

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

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