European stocks advanced for a fifth straight day as BP Plc rallied the most since 2008 after saying it may be able to stop the flow of oil from its leaking Gulf of Mexico well.
BP, the fifth-biggest stock in the benchmark Stoxx Europe 600 Index, jumped 9.4 percent, further boosted by reports that Exxon Mobil Corp. may bid for the oil company and that it’s selling assets in Alaska. Zodiac Aerospace SA advanced 7.1 percent after rejecting a takeover approach from Safran SA. Getinge AB climbed 4.5 percent as the world’s largest maker of surgical workstations reported increased profit.
The Stoxx 600 rose 0.4 percent to 251.18 as investors prepared for Alcoa Inc. to unofficially kick off the U.S. earnings season. The gauge posted the biggest gain in a year last week amid easing concern about the economic recovery and speculation that the selloff in equities since April has overshot the outlook for company profits.
“Investors have been particularly keen to buy BP on hope that new efforts today to install a containment cap over the leak will succeed,” said Giles Watts, London-based head of equities at City Index. “Talk of asset sales and potential bids are also keeping investors active.”
National benchmark indexes rose in 12 of the 18 western European markets. The U.K.’s FTSE 100 climbed 0.7 percent, France’s CAC 40 gained 0.4 percent and Germany’s DAX increased 0.2 percent.
Alcoa, the largest U.S. aluminum producer, is due to become the first member of the Dow Jones Industrial Average to post second-quarter earnings when it releases results after the close of New York trading today. A total of 23 companies in the S&P 500, including Google Inc. and Citigroup Inc. will report earnings this week, according to Bloomberg data.
“Earnings shouldn’t be too bad but we need to keep in mind that the estimates are quite aggressive so there could be room for disappointment,” said Markus Steinbeis, head of equity portfolio management at the Unterfoehring, Germany-based unit of Pioneer Investments, which oversees about $221 billion globally. “The focus in the coming weeks will definitely be much more in the area of earnings.”
In the U.K., the number of companies missing sales and earnings targets may increase as the government’s spending cuts to reduce the budget deficit hit the “fragile” recovery, according to Ernst & Young. While the number of companies issuing profit warnings fell to 45 in the second quarter, the lowest in seven years, they may increase later this year, Ernst & Young said in a report released yesterday.
BP soared 9.4 percent to 398.95 pence, the biggest gain since November 2008. Should the Gulf of Mexico oil well pass a 48-hour test pressure test which might start as early as today, BP may be able to stop the leak, Doug Suttles, the company’s chief operating officer for exploration and production, told reporters on a conference call. A relief well will still be needed for a permanent plug, he said.
Separately, the Sunday Times reported that Exxon has been told by the U.S. government it can look at a potential bid for BP. In addition, people familiar with the matter said the U.K. company is in talks to sell assets to Apache Corp. for a price of less than $12 billion.
Zodiac Aerospace climbed 7.1 percent to 42.62 euros as Europe’s biggest maker of airplane seats rejected a takeover approach from jet-engine-maker Safran, saying the companies have little overlap or potential cost savings.
Getinge advanced 4.5 percent to 162 kronor after saying second-quarter net income rose to 487 million kronor ($64.6 million) from 330 million kronor a year earlier. Analysts had estimated a profit of 476 million kronor, according to a Bloomberg survey.
Groupe SEB SA, the world’s largest maker of countertop kitchen appliances, rallied 6.3 percent to 58.48 euros as Goldman Sachs Group Inc. upgraded the shares to “buy” from “neutral.”
DnB NOR ASA climbed 5.8 percent to 72.7 kroner. Norway’s biggest bank wants to conduct more investment banking in Asia and help Norwegian companies establish a second listing in Singapore, Dagens Naeringsliv reported today, citing Erik Borgen, the lender’s regional director for Asia.
Volkswagen AG gained 1.5 percent to 73.22 euros. The biggest foreign carmaker in China boosted sales in the nation 46 percent in the first half after introducing new models to attract consumers in the world’s largest vehicle market.
Kontron AG sank 18 percent to 6.17 euros, the most since 2002, after the maker of miniature computers for slot machines and drone aircraft said it’s setting aside 34 million euros ($42.8 million) for outstanding debts in Malaysia, Taiwan and Hong Kong.