European Stocks Climb as Credit Agricole Beats Forecasts

Aug. 5 (Bloomberg) -- Kiran Ganesh, cross asset strategist at UBS Wealth Management, discusses whether or not equities will be able to ignore growing geopolitical risks and how European gas supplies may impact sanctions on Russia. He speaks with Jonathan Ferro on “On The Move.”

European stocks rose, rebounding from four days of losses, as companies including Credit Agricole SA and Deutsche Post AG reported better-than-expected earnings.

Credit Agricole climbed 2.2 percent after also saying a key solvency measure improved in the second quarter. Deutsche Post gained 2.2 percent after reporting a 5.7 percent increase in quarterly profit. Telefonica SA fell 1.7 percent after saying it offered 6.7 billion euros ($9 billion) for a Vivendi SA unit.

The Stoxx Europe 600 Index climbed 0.3 percent to 332.1 at the close of trading, paring earlier gains of as much as 0.8 percent. The equity benchmark dropped 2.9 percent last week as companies including ArcelorMittal and Holcim Ltd. posted disappointing results. It closed yesterday at the lowest level since April 16.

“Earnings in Europe have been a mixed bag,” said Pierre Mouton, who helps oversee $8 billion at Notz, Stucki & Cie. in Geneva. “European markets are pretty cheap on average so buying a bit now can be a good investment if you look ahead three to six months.”

Stoxx 600 companies trade at 15.1 times estimated earnings, down from last month’s four-year high of 15.7 and cheaper than the 16.2 multiple for S&P 500 firms, according to data compiled by Bloomberg.

National benchmark indexes advanced in nine of the 18 western-European markets. France’s CAC 40 added 0.4 percent, Germany’s DAX rose 0.4 percent, and the U.K.’s FTSE 100 gained 0.1 percent.

Credit Agricole

Credit Agricole gained 2.2 percent to 10.51 euros after posting second-quarter operating profit of 628 million euros, exceeding the average analyst estimate of 617 million euros. France’s third-largest bank by market value said fully loaded common equity Tier 1 ratio, a key solvency measure under Basel III rules, rose to 9.9 percent at the end of June from 9 percent in the previous quarter. The lender also booked 708 million euros in costs related to its 14.6 percent stake in bailed-out Portuguese lender Banco Espirito Santo SA.

Deutsche Post gained 2.2 percent to 23.75 euros after reporting second-quarter Ebit of 654 million euros as the German parcel business and international-express unit of Europe’s largest postal company grew. That surpassed the 609.5 million-euro average projection of analysts in a Bloomberg survey.

Aggreko Plc (AGK) rose 1.1 percent to 1,740 pence. The supplier of mobile power generators posted first-half sales of 768 million pounds ($1.3 billion) as business in the Americas, and Europe, Middle East and Asia grew. That beat the 742 million-pound average analyst forecast.

Telefonica Declines

Telefonica slipped 1.7 percent to 11.79 euros. The Spanish telecommunications company said it has offered to buy Vivendi’s Brazilian Internet-provider unit GVT. The proposal comprises 11.96 billion reais ($5.3 billion) in cash and newly issued shares in Telefonica’s Brazil unit, the Madrid-based company said in statement. Vivendi added 3.6 percent to 19.59 euros.

Bilfinger SE plummeted 9.7 percent to 55.03 euros after it forecast full-year adjusted net income of 205 million euros to 220 million euros, 25 million euros less than its June 30 guidance. That’s the second time in five weeks the German builder has lowered its profit forecast. The company announced late yesterday that Chief Executive Officer Roland Koch will step down on Aug. 8. Supervisory board member Herbert Bodner will replace him on an interim basis.

Meggitt Plc slid 4.7 percent to 479.7 pence after saying first-half pretax profit fell 21 percent to 143.8 million pounds. The U.K. supplier of plane wheels and brakes deferred revenue of as much as 30 million pounds until next year, saying a supplier in Brazil filed for insolvency.

A Markit Economics report today showed euro-area services expanded less in July than initially estimated. The purchasing managers’ index rose to 54.2 from 52.8 in June, below the 54.4 reading published on July 24. A composite index of services and manufacturing increased to 53.8, also lower than previously estimated.

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

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Alan Soughley, Will Hadfield

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