European Stocks Rise Amid M&A Deals; Orkla, Dougles Gain

European Stocks Little Changed
A visitor looks at stock price information displayed on a screen inside the Madrid Stock Exchange in Madrid. Photographer: Angel Navarrete/Bloomberg

European stocks climbed amid an increase in mergers-and-acquisition activity and as a U.S. report showed retail sales rose more than forecast in September.

Orkla ASA jumped 3.4 percent after agreeing to combine units with Norsk Hydro ASA. Douglas Holding AG jumped 8.1 percent after Advent International Corp. made a 1.5 billion euros ($1.9 billion) bid for the retailer. Vivendi SA gained 2.8 percent on a report the company is in talks to merge its mobile-phone unit SFR with Numericable.

The Stoxx Europe 600 Index advanced 0.5 percent to 270.8 at the close in London, after falling 1.7 percent last week. The benchmark gauge has rallied 16 percent from this year’s low on June 4 boosted by bond-purchasing programs from the European Central Bank and the Federal Reserve.

“We have been in a bit of a phase of consolidation; the question is ‘do you buy into that?’ and I think you do,” Giles Keating, head of research for private banking and asset management at Credit Suisse Group AG said on Bloomberg Television in London. “If we look at the economic data coming through, it’s on the positive side. I believe we are seeing an underlying global upswing. It’s slow and grinding, but it’s happening.”

Stocks fell in Europe last week after the International Monetary Fund and the World Bank lowered economic-growth forecasts and companies predicted their earnings will miss estimates.

Retail Sales

Today’s U.S data showed retail sales climbed 1.1 percent in September, beating the median economist forecast for a 0.8 percent gain. That followed a revised 1.2 percent increase in August, the Commerce Department figures showed today

In China, data showed inflation in the world’s second-biggest economy was close to the slowest pace in two years last month, giving the government more room to stimulate the economy should it deteriorate. Separate figures showed Chinese imports increased 2.4 percent from a year earlier while exports climbed 9.9 percent.

National benchmark indexes gained in 15 of the 18 western European markets. The U.K.’s FTSE 100 rose 0.2 percent, France’s CAC 40 climbed 0.9 percent, while Germany’s DAX advanced 0.4 percent.

Orkla gained 3.4 percent to 46.75 kroner after the company and Norsk Hydro agreed to combine units to provide aluminum profiles, building systems and tubing in North America and Europe. The new entity will have sales of 47 billion kroner ($8.2 billion) and some 25,000 employees.

Douglas Takeover

Douglas jumped 8.1 percent to 37.62 euros, the biggest increase since Jan. 12, after Advent made an offer of 38 euros per share for the German cosmetics retailer via investment vehicle Beauty Holding Three AG.

The retailer’s three largest shareholders have a binding commitment to accept the bid, Advent said.

Vivendi rallied 2.8 percent to 15.73 euros. Europe’s biggest media and telecommunications company is in talks to merge SFR with Numericable, Le Journal du Dimanche reported, citing unidentified people. The merger would bring 1 billion euros in savings and Vivendi would keep a 49 percent stake in the new entity, according to the report.

Renault SA climbed 4.3 percent to 35.84 euros as a spokeswoman for the French carmaker, Raluca Barb, told Bloomberg News that there were no plans to change its alliance structure with Nissan. The shares earlier surged as much as 9.8 percent after Reuters reported the carmakers are reviewing the crossed shareholdings that underpin their 13-year-old alliance.

Rentokil, Total

Rentokil Initial Plc climbed 2 percent to 86.9 pence after the Sunday Telegraph reported that the company may sell or close its City Link parcel-delivery unit. The newspaper cited an unidentified official close to the company. Rentokil expects to make the decision by year-end, it said.

Total SA added 1 percent to 38.50 euros after France’s largest oil company said European refining margin rose to $51 per tonne in the third quarter, a 34 percent jump from the previous quarter.

Hennes & Mauritz AB gained 2 percent to 233.8 kronor after Europe’s second-largest clothing retailer reported a 15 percent increase in total sales for September. Like-for-like sales climbed 6 percent.

Banco Santander SA gained 1.2 percent to 5.81 euros. The Spanish lender abandoned its 1.7 billion-pound ($2.7 billion) purchase of 316 Royal Bank of Scotland Group Plc branches after delays in the completion of the transaction.

RBS Plans

RBS, Britain’s biggest government-owned bank, had been required to sell the outlets by 2014 to comply with European Union state-aid rules after receiving the world’s biggest banking bailout in 2008. RBS slid 1 percent to 268.1 pence.

Richard Branson’s Virgin Money has been in “informal contact” with RBS in the past few days about restarting talks to buy the branches, the Financial Times reported, citing unidentified people familiar with the matter.

Rio Tinto Group, the world’s third-largest mining company, slipped 1.6 percent to 2,973.5 pence after Goldman Sachs Group Inc. cut its 12-month estimate on copper prices by 11 percent on concern demand from China will slow.

Anglo American Plc fell 2 percent to 1,788.5 pence, while Bumi Plc tumbled 12 percent to 245.3 pence.

The volume of shares changing hands in Stoxx 600-listed companies was 24 percent lower than the average of the last 27 days, according to data compiled by Bloomberg.

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