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European Stocks Rise Amid U.S. Talks as Royal Mail Jumps

Frankfurt Stock Exchange
Financial traders monitor data on computer screens at the Frankfurt Stock Exchange in Frankfurt. The Stoxx 600 surged 1.7 percent yesterday amid signs U.S. lawmakers will agree on a compromise deal to avoid an unprecedented default. Photographer: Ralph Orlowski/Bloomberg

Oct. 11 (Bloomberg) -- European stocks climbed for a second day amid optimism U.S. lawmakers will agree to lift the debt limit, removing the imminent threat of default.

Royal Mail Group Ltd. jumped 38 percent on its first day of trading in London. Actelion Ltd. advanced 4 percent to lead a rally in health-care companies. Swedish Match AB tumbled the most in almost four months after saying earnings at its U.S. cigars and chewing-tobacco unit will decline.

The Stoxx Europe 600 Index rose 0.4 percent to 311.61 at the close of trading. The benchmark gauge surged 1.7 percent yesterday as House Republican leaders presented proposals to raise the $16.7 trillion U.S. debt limit for six weeks without policy conditions. The index has increased 0.6 percent in the past five days after sliding for two straight weeks.

“The positive sentiment from yesterday’s rally is spilling over to today’s trading day,” Patrick Kraehenbuehl, a portfolio manager at Umblin AG in Zurich, said in a telephone interview. “It was a very strong signal that was sent to investors, a first positive approach from both sides. However, it won’t be an easy stroll to come to a compromise. Markets may be a bit overly enthusiastic.”

National benchmark indexes advanced in 13 of the 18 western European markets. The U.K’s FTSE 100 rallied 0.9 percent and Germany’s DAX climbed 0.5 percent to close at a record. France’s CAC 40 was little changed.

Debt Talks

President Barack Obama met with Republican leaders yesterday after House Speaker John Boehner said he would offer a measure to push back the possibility of a U.S. default until Nov. 22.

Without congressional action to raise the debt limit, the U.S. will exhaust its borrowing authority on Oct. 17. The government of the world’s biggest economy has been partially shut down since Oct. 1 after lawmakers failed to pass a budget.

Royal Mail, Britain’s 360-year-old postal service, jumped 38 percent to 455 pence on its trading debut in London. The initial public offering was the U.K.’s biggest sale of state assets since British Rail was broken up in the 1990s.

Actelion, a Swiss drugmaker, rose 4 percent to 63.55 Swiss francs as health-care shares contributed the most to the Stoxx 600’s gain. Shire Plc climbed 2.7 percent to 2,445 pence in London, while Roche Holding AG, the world’s biggest maker of cancer drugs, gained 1.8 percent to 238.90 francs.

Genmab A/S, the Danish developer of cancer drugs, added 2.3 percent to 236.90 kroner. The company said its ofatumumab drug showed a significant reduction in cumulative number of new brain lesions in a multiple sclerosis study.

EMS Rises

EMS-Chemie Holding AG advanced 3.1 percent to 321.25 francs. The chemical maker said nine-month sales climbed 7 percent to 1.44 billion francs ($1.58 billion) and forecast that the economy will remain favorable in coming months.

“Growth seems likely to even accelerate in the fourth quarter,” Patrick Rafaisz, an analyst at Vontobel Holding AG, wrote in a note to clients. “EMS-Chemie’s top-line performance is once again impressive.”

Swedish Match, the maker of Longhorn snuff, sank 4.2 percent to 221.30 kronor, the most since June 20. Third-quarter operating profit at its U.S. cigars and chewing tobacco unit, which accounts for about a fifth of revenue, fell by as much as 60 million kronor ($9.2 million) from a year earlier.

Neste Oil

Neste Oil Oyj, the Finnish refiner that said last month it’s benefiting from increased renewable-fuel sales in North America, plunged 7.5 percent to 15.58 euros. The U.S. Environmental Protection Agency is considering scaling back legal requirements on the use of ethanol fuels next year, according to an internal proposal provided to Bloomberg.

Geberit AG, the Swiss maker of toilets and bathroom-piping systems, fell 1.6 percent to 236.90 francs. Goldman Sachs Group Inc. recommended selling the shares, citing a disappointing outlook for growth in its most profitable products.

EON SE and RWE AG, Germany’s biggest utilities, dropped 3.6 percent to 13.74 euros and 2.1 percent to 26.78 euros, respectively. A gauge of utility stocks in the Stoxx 600 slid 0.6 percent for the only drop out of 19 groups.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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