European stocks advanced, recouping this week’s losses, after the Italian Senate approved an austerity package, raising optimism that the euro area’s second-most indebted country will contain the debt crisis.
Telecom Italia SpA gained 5.3 percent after reporting better-than-expected third-quarter earnings. Banks and insurers led gains, with BNP Paribas SA and Allianz SE climbing more than 5 percent. International Consolidated Airlines Group SA, the company created by the merger of British Airways and Spain’s Iberia, jumped 4.9 percent.
The Stoxx Europe 600 Index increased 2.4 percent to 240.98 at the close in London. The gauge erased earlier losses and rose 0.5 percent this week on optimism a new government led by former European Union Competition Commissioner Mario Monti will take charge in Italy.
“In the eyes of financial markets, Mario Monti seems to be the best possible choice at present,” said Alessandro Fezzi, senior market analyst at LGT Capital Management in Pfaeffikon, Switzerland. “He might even win back market confidence. Even so, the success of the painful reforms is by no means guaranteed and financial markets will soon test the new government.”
The Senate in Rome voted 156 to 12 to pass the package of measures promised to the European Union in a bid to boost growth and cut Italy’s debt of 1.9 trillion euros ($2.6 trillion), the world’s fourth biggest. Opposition lawmakers did not take part in the vote, allowing the bill to pass.
In Greece, a new unity government led by Lucas Papademos was sworn in today with a mandate to implement budget measures and decisions related to a 130 billion-euro bailout agreed on an Oct. 26. Elections may take place on Feb. 19. The new government said Evangelos Venizelos will remain the country’s finance minister and deputy prime minister.
“The new great white hopes in Athens and Rome are likely to receive early praise from the markets,” Fezzi said. “But how long it will last is uncertain.”
About 48 percent of the 294 companies in the Stoxx 600 that have reported earnings since Oct. 11 topped analysts’ estimates for per-share profit, according to data compiled by Bloomberg. About 44 percent missed the projections.
“European earnings were rather mixed,” Otto Waser, chief investment officer at Research & Asset Management AG, told Bloomberg Television from Zurich. “We’re incrementally encouraged by the guidance for the current quarter of the companies. On average, earnings were more supportive than we thought six weeks ago.”
National benchmark indexes advanced in 15 of the 18 western European markets today. France’s CAC 40 rose 2.8 percent and the U.K.’s FTSE 100 gained 1.9 percent. Germany’s DAX rose 3.2 percent, while Italy’s FTSE MIB jumped 3.7 percent.
A report today showed that U.S. consumer sentiment rose this month, beating economists’ forecasts. The Reuters/University of Michigan preliminary sentiment for November climbed for a third month, to 64.2 from 60.9 in October. Economists had called for an increase to 61.5, according to a Bloomberg survey.
Telecom Italia jumped 5.3 percent to 89.1 euro cents after third-quarter net income surged 33 percent to 807 million euros, beating analysts’ estimates for 708.5 million euros.
Banks and insurers paced gains. BNP Paribas surged 5.7 percent to 32.24 euros. National Bank of Greece SA gained 2.5 percent to 2.09 euros and Alpha Bank SA added 2.9 percent to 1.08 euros.
Schroders climbed 6.8 percent to 1,393 pence and KBC Groep NV rallied 8.8 percent to 13.84 euros. Deutsche Bank AG raised Schroders to “hold” from “sell” and Exane BNP Paribas SA upgraded KBC Groep to “neutral” from “underperform.”
Allianz SE, Europe’s biggest insurer, rose 5.6 percent to 76.25 euros after saying it is “ready to take a closer look” at assets such as mortgages that some troubled banks may sell. The company posted a bigger-than-estimated 84 percent drop in third-quarter profit after writing down Greek government debt and investments in financial companies.
Mapfre SA gained 7 percent to 2.62 euros as a gauge of European insurers was the best performer of the 19 industry groups on the Stoxx 600, climbing 3.8 percent. Aegon NV added 5.5 percent to 3.36 euros, while AXA SA increased 4 percent to 10.61 euros.
IAG jumped 4.9 percent to 148.7 pence after saying it targets an operating profit of about 1.5 billion euros in 2015.
Vivendi jumped 2.6 percent to 15.87 euros after its Universal Music Group unit agreed to buy the recorded-music assets of EMI Group from Citigroup Inc. in a deal valued at 1.2 billion pounds ($1.9 billion).
Aker Solutions ASA, Norway’s biggest oil rig maker, rallied 8.5 percent to 71.50 kroner after the company signed a contract with Lundin Petroleum AB to build a 700 million kroner ($124 million) subsea production system for the Brynhild project on the Norwegian continental shelf. The contract is valued at 700 million kroner. Lundin Petroleum gained 5.5 percent to 176.20 kroner.
Galp Energia SGPS, Portugal’s largest oil company, slumped 11 percent to 13.25 euros, its biggest decline in three months, after an agreement to sell a 30 percent stake in its Brazil unit to China’s Sinopec Group for $3.54 billion.