Oct. 31 (Bloomberg) -- European stocks advanced to the highest level in more than five years, with the Stoxx Europe 600 Index gaining for a second month, as better-than-estimated earnings outweighed speculation the Federal Reserve may trim bond purchases sooner than forecast.
BNP Paribas SA climbed 3.4 percent after posting an unexpected increase in third-quarter net income. Alcatel-Lucent surged the most in five years after reporting a narrower-than-forecast loss. Royal Dutch Shell Plc declined the most more than two years after posting a 32 percent profit slump. Novo Nordisk A/S slid 7.4 percent after earnings missed projections.
The Stoxx 600 rose 0.5 percent to 322.37, its highest level since May 22, 2008. The gauge rallied 3.8 percent in October, its eighth monthly increase this year, as U.S. lawmakers resolved a fiscal impasse.
“We have to keep an eye on Fed tapering,” Neil Veitch, investment director at SVM Asset Management in Edinburgh, said. “The rally in the last three to four years has been led by unconventional monetary policy. That has obviously dominated the investment landscape for a prolonged period of time. As a consequence, many assets have become mis-priced. So as a portfolio manager, it’s imperative you keep an eye on any structural developments regarding quantitative easing.”
National benchmark indexes rose in 11 of the 18 western European markets. Germany’s DAX advanced 0.3 percent to a record, and France’s CAC 40 gained 0.6 percent. The U.K.’s FTSE 100 slid 0.7 percent.
The Federal Open Market Committee yesterday kept its monthly bond purchases at $85 billion and said that while it sees signs of strength in the U.S. economy, it would wait for more evidence of sustained improvement before slowing stimulus. In a statement released after a two-day meeting, the FOMC dropped its warning from last month that tighter financial conditions could impair recovery.
The odds for the Fed to start reducing bond purchases in January rose to 45 percent from 25 percent before the statement, Citigroup Inc. said. Economists surveyed by Bloomberg Oct. 17-18 predicted the Fed would wait until March to begin the cuts.
A release today showed fewer Americans filed first-time applications for jobless benefits last week. Economists in another poll predict the Institute for Supply Management will say tomorrow its manufacturing index fell in October.
In the euro area, the inflation rate unexpectedly dropped in October, fueling speculation the European Central Bank will cut interest rates to boost recovery. The ECB holds its next policy meeting on Nov. 7.
BNP Paribas rose 3.4 percent to 54.54 euros after France’s largest bank posted an unexpected increase in earnings as it set aside fewer provisions for bad debts and pared costs. Net income climbed to 1.36 billion euros ($1.85 billion) from 1.33 billion euros a year earlier, beating the 1.19 billion-euro average estimate of six analysts surveyed by Bloomberg.
Alcatel-Lucent surged 19 percent to 2.82 euros. The French network-equipment maker said its third-quarter net loss fell to 200 million euros from a 316 million-euro loss a year earlier. Analysts had predicted a 274 million-euro loss, according to data compiled by Bloomberg. The company also said it will exceed its full-year target for cost savings.
Anheuser-Busch InBev NV gained 2.8 percent to 76.60 euros. The world’s biggest brewer said consolidated earnings before interest, taxation, depreciation and amortization rose 10.5 percent in the three months through Sept. 30. The median estimate of nine analysts surveyed by Bloomberg News had called for growth of 5.7 percent.
Ingenico advanced 5.6 percent to 55.46 euros, climbing the most since September 2012. The provider of payment terminals and services said third-quarter revenue rose to 348 million euros from 311 million euros a year ago. The French company also boosted its full-year forecasts.
Geberit AG rose 7.4 percent to 271.30 Swiss francs, a record. The maker of toilets and pipes reported better-than-projected third-quarter profit and confirmed full-year forecasts. Ebitda rose to 170.1 million francs ($188 million), beating the 153.9 million-franc estimate of analysts surveyed by Bloomberg.
Shell declined 4.9 percent to 2,076.5 pence in London, for its largest retreat since August 2011. Europe’s biggest oil company said third-quarter earnings dropped as refining gains shrank and Nigerian output suffered disruption. Profit excluding one-time items and inventory changes fell to $4.5 billion from $6.6 billion a year earlier. That missed the $5.3 billion average estimate of 11 analysts surveyed by Bloomberg.
Novo Nordisk dropped 7.4 percent to 914 kroner. The world’s biggest insulin maker reported third-quarter profit that missed analysts’ estimates on slower-than-expected growth of its Victoza diabetes treatment.
Croda International Plc lost 7.6 percent to 2,436 pence, falling the most since December 2008. The second-biggest maker of cosmetics ingredients said it expects fourth-quarter profit to stagnate compared with the third quarter because of subdued market conditions and weaker currencies.
Technip SA tumbled 10 percent to 77.15 euros, its sharpest decline since December 2008. Europe’s largest oilfield-services provider by market value reduced full-year targets after missing estimates for third-quarter profit.
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