European Stocks Rise for Third Day; ARM Holdings, Hermes Advance
European stocks advanced for a third day, extending a 27-month high, as U.S. economic growth was revised higher and merger activity boosted companies from Hermes (RMS) International SCA to Aker Solutions ASA. (AKSO)
ARM Holdings Plc soared 9.1 percent after Microsoft Corp. was said to be preparing to unveil a full version of its Windows operating system that runs on the U.K. company’s technology. Hermes gained 2.3 percent as LVMH Moet Hennessy Louis Vuitton SA (MC) raised its stake in the luxury-goods company. Aker Solutions, Norway’s largest engineering company, climbed 4.3 percent as Jacobs Engineering Group Inc. agreed to buy some of its units.
The benchmark Stoxx Europe 600 Index rose 0.1 percent to 281.45 at the 4:30 p.m. close in London. The gauge has rallied 11 percent in 2010, recovering all its losses from the plunge that followed Lehman Brothers Holdings Inc.’s collapse in 2008, as companies reported higher earnings, the European Union bailed out Greece and Ireland and the Federal Reserve unveiled $600 billion of additional bond purchases to support the recovery.
“People have forgotten that the corporate sector even in Europe and U.S. is actually quite profitable and stocks look quite cheap to us,” Kevin Gardiner, the head of global investment strategy at Barclays Wealth, which manages about $237 billion, said in a Bloomberg Television interview with Maryam Nemazee. “Cyclical sectors, capital goods and technology will do quite well. There is still plenty of room for stock markets to do noticeably better again” next year.
National benchmark indexes declined in 11 of the 18 western European markets. France’s CAC 40 lost 0.2 percent and Germany’s DAX slipped 0.1 percent. The U.K.’s FTSE 100 (UKX) rose 0.5 percent.
The U.S. economy, the world’s largest, expanded at a 2.6 percent annual rate in the third quarter. The revised increase in gross domestic product compares with a 2.5 percent estimate issued last month and was less than the median forecast of a 2.8 percent in a Bloomberg News survey, figures from the Commerce Department showed today.
“U.S. forecasters are revising up their GDP forecasts and some of them are even going for 4 percent next year,” Geoff Lewis, Hong Kong-based head of investment services at JPMorgan Asset Management, said on Bloomberg Television’s “On the Move Asia” with Rishaad Salamat. “That would make a serious dip in unemployment and as soon as that starts to come down consumer confidence would really hit the roof.”
A separate report showed sales of existing homes rose less than forecast in November as the industry that triggered the worst U.S. recession in seven decades struggled to recover after a government tax credit lapsed.
In the U.K., the economy expanded less than initially estimated in the third quarter. Gross domestic product rose 0.7 percent from the previous three months, the Office for National Statistics said today. That compares with an initial estimate of 0.8 percent, which was also the median forecast of 22 economists in a Bloomberg News survey.
ARM, a U.K. chip designer, surged 9.1 percent to 440.3 pence, the highest price since 2001. The new Microsoft product will debut at the Consumer Electronics Show in January, said two people, who asked not to be identified because the plans are confidential. The software would be tailored for battery-powered devices, such as tablet computers and other handhelds, the people said.
Hermes, Aker Solutions
Hermes climbed 2.3 percent to 160.30 euros. LVMH now owns more than 20 percent of Hermes, up from the 17.1 percent it announced in October. LVMH bought the shares on the market, said Olivier Labesse, a company spokesman. The increase may boost speculation that LVMH Chairman Bernard Arnault is targeting a takeover of Hermes, even as the company said again it isn’t seeking a board seat or control.
Aker Solutions rallied 4.3 percent to 101.5 kroner. Jacobs Engineering agreed to buy some of the company’s units for an estimated $675 million to expand its metals and mining business.
Northern Foods Plc gained 4.1 percent to 63 pence as closely held Boparan Holdings Ltd. said it may make an offer for the maker of Fox’s biscuits, disrupting an all-stock merger with Greencore Group Plc. (GNC) Greencore slid 4.5 percent to 1.27 euros in Dublin trading.
British Sky Broadcasting Group Plc (BSY) climbed 2 percent to 743 pence amid speculation that News Corp.’s takeover of the company is less likely to be blocked. Conservative culture minister Jeremy Hunt was given responsibility for the review of the bid as Business Secretary Vince Cable was stripped of his authority for media policy after being quoted as saying he had “declared war” on News Corp. Chairman Rupert Murdoch.
“The odds of a referral have decreased significantly,” said Conor O’Shea, an analyst at Kepler Capital Markets in Paris. “There’s a major perceived change in the way that Jeremy Hunt views things as opposed to Vince Cable.”
Adidas AG (ADS) declined 1.6 percent to 50.58 euros after rival sportswear company Nike Inc., the world’s largest maker of athletic shoes, reported orders that missed analysts’ estimates.
Beni Stabili SpA (BNS), the Italian real-estate company controlled by France’s Fonciere des Regions SA, sank 2.3 percent to 64.5 euro cents as Delfin Sarl sold a 4.3 percent stake for 63 cents a share. Delfin was Beni Stabili’s third-biggest shareholder, according to Bloomberg data.
Micro Focus International Plc (MCRO) retreated 3.1 percent to 393.5 pence, the biggest decline in five weeks, as the company said in a regulatory filing that Chairman Kevin Loosemore sold shares.
To contact the reporter on this story: Adam Haigh in London at firstname.lastname@example.org