Europe Stocks Climb, Posting First Monthly Gain Since May

Aug. 29 (Bloomberg) – Bloomberg’s Caroline Hyde reports on Tesco lowering its full-year profit forecast and the new incoming CEO, Dave Lewis. She speaks with Guy Johnson on Bloomberg Television's "The Pulse." (Source: Bloomberg)

European stocks advanced, posting their first monthly gain since May, as drugmakers climbed, outweighing a slump in Tesco Plc shares.

AstraZeneca Plc climbed 2 percent, leading a gain by health-care companies, after a report that Pfizer Inc. may have resumed takeover talks. Tesco dropped 6.6 percent after lowering its full-year profit forecast and its interim dividend.

The Stoxx 600 gained 0.3 percent to 342 at 4:30 p.m. in London, erasing a decline of as much as 0.4 percent in the final half an hour of trading. The benchmark dropped 0.7 percent yesterday as evidence mounted that Russian troops have made an incursion into eastern Ukraine.

“Tesco’s surprise announcement has been taken as a sign that competition in the sector is about to intensify, at shareholders’ expense,” said Guy Foster, the London-based head of research at Brewin Dolphin Securities Ltd., which manages more than 28 billion pounds ($46 billion). “The health-care sector is being led by AstraZeneca bid rumors.”

The Stoxx 600 has climbed 1.6 percent this week and 1.8 percent this month as European Central Bank President Mario Draghi signaled policy makers are ready to start a bond-buying program. It dropped in July and June.

Twelve out of 18 national benchmark indexes in Western Europe rose today. Germany’s DAX added 0.1 percent, while France’s CAC 40 gained 0.3. The U.K.’s FTSE 100 increased 0.2 percent.

AstraZeneca Climbs

AstraZeneca gained 2 percent to 4,567 pence. Swedish newspaper Dagens Industri said Pfizer may have restarted bid talks with the London-listed drugmaker, without revealing where it got the information. The American company abandoned a $117 billion bid to buy AstraZeneca in May. U.K. takeover rules prevented it from resuming talks until Aug. 26.

Tesco slid 6.6 percent to 230 pence, its lowest price since 2003, after the U.K.’s biggest retailer lowered its full-year profit forecast to a range of 2.4 billion pounds to 2.5 billion pounds, and cut its interim dividend by 75 percent to 1.16 pence per share. It expects first-half trading profit to reach 1.1 billion pounds. Dave Lewis will take over as chief executive officer from Sept. 1, instead of Oct. 1 as previously announced.

The company said that its spending on the business along with difficult trading forced it to reduce its outlook for the financial year ending in 2015.

A gauge of British food and drug retailers sank 5.7 percent. J Sainsbury Plc and Wm Morrison Supermarkets Plc, the U.K.’s third- and fourth-largest supermarket chains, dropped 4.4 percent to 290.3 pence and 5 percent to 177.5 pence, respectively.

D’Ieteren Declines

D’Ieteren SA (DIE) lost 2.8 percent to 31.60 euros after posting first-half pretax profit excluding one-off items of 86.7 million euros ($114 million). That missed the average analyst estimate of 95.9 million euros. The owner of the world’ largest vehicle-glass repair company repeated its full-year forecast that profit before taxes and special items will drop 10 percent.

A Eurostat report showed that inflation in the 18-nation euro zone fell to 0.3 percent this month, matching the median projection of economists surveyed by Bloomberg. The threat of deflation may prompt the ECB to start buying assets in an attempt to return inflation to the bank’s target.

The volume of shares changing hands in Stoxx 600-listed companies was 4.2 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

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 Will Hadfield

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