European Stocks Advance, Led by Automakers, Lagardere, JCDecaux
European stocks gained the most in almost two weeks as investors speculated that last year’s rally in equities will continue in 2011 amid expanding corporate profits and economic growth.
Porsche SE jumped 15 percent as a U.S. judge dismissed claims against the carmaker for more than $2 billion. Fiat Industrial SpA began trading in Milan as the split from Fiat SpA (F) became effective today. Lagardere SCA (MMB) surged as France’s biggest publisher said it’s in talks to sell its international magazine business. JCDecaux SA (DEC) advanced 2.4 percent as the company said it doesn’t “feel any deceleration” in its Chinese business.
The Stoxx Europe 600 Index rose 0.8 percent to 278.02 at the 5:30 p.m. close in Frankfurt, the biggest gain since Dec. 21. With U.K. and Ireland markets remaining closed, about 1.4 billion shares of companies in the Stoxx 600 changed hands, compared with a daily average of 4.2 billion over 2010, according to data compiled by Bloomberg.
“As we enter the new year, there is an apparent bullish bias among equity investors.” Ian Scott and Shanthi Nair, London-based strategists at Nomura Holdings Inc., wrote in a research report dated yesterday. “Valuation and likely further expansion in earnings in 2011 also suggest that the market is underpinned.”
The benchmark Stoxx 600, which fell the most since July last week as volumes tumbled amid the Christmas holidays, still surged 8.6 percent in 2010 as corporate profits rose, central banks implemented actions aimed at boosting the economic recovery and the European Union bailed out Greece and Ireland.
National benchmark indexes rose in 15 out of the 16 western European markets that were open. France’s CAC 40 (CAC) gained 2.5 percent, while Germany’s DAX advanced 1.1 percent and Switzerland’s SMI Index added 0.9 percent.
Stocks climbed as a report showed Europe’s manufacturing industry grew more than initially estimated in December, powered by Germany’s export-led expansion. A gauge of manufacturing in the euro area rose to 57.1 from 55.3 the previous month, London-based Markit Economics said today. It had previously reported an increase to 56.8 in December. A reading above 50 indicates expansion.
In the U.S., the Institute for Supply Management’s manufacturing index rose to 57 from 56.6 in November, the Tempe, Arizona-based group said today. The figure matched the median forecast in a Bloomberg News survey of 63 economists.
A separate report showed that construction spending in the U.S. rose in November for a third straight month, boosted by funding for homebuilding and federal government projects.
Porsche climbed 15 percent to 68.49 euros, the biggest gain since April 2009, as a U.S. judge dismissed two lawsuits claiming the maker of the 911 sports car cost hedge funds more than $2 billion by misleading short-sellers in its acquisition of Volkswagen AG (VOW) shares in 2008.
WestLB AG, which kept a “buy” rating, lifted its price estimate on Porsche to 80 euros from 72 euros, saying in a note that “the risk of a very large claim against Porsche is now sharply reduced and we believe more investors will now be prepared to consider the fundamentals of the Porsche equity story.” Commerzbank AG upgraded the stock to “buy” from “hold.”
Volkswagen rose 5.1 percent to 127.6 euros after extending Chief Executive Officer Martin Winterkorn’s contract by five years, giving the executive the time to complete a merger with Porsche and surpass Toyota Motor Corp. as the biggest automaker.
Fiat Industrial closed at 9 euros after its first trading session. The split of Fiat Industrial, whose main assets are truck and tractor makers Iveco and CNH Global NV, and Fiat became effective today, with every Fiat shareholder owning one Fiat share and one Fiat Industrial share. Fiat ended at 7.03 euros. The shares closed at 15.43 euros on Dec. 30. Borsa Italiana set a reference price for that day at 8.734 euros for Fiat Industrial and at 6.696 euros for Fiat SpA.
Construction stocks were the second-best performers in Europe today, led by Cie. De Saint-Gobain SA (SGO) after Europe’s biggest supplier of building materials completed the sale of its Advanced Ceramics business to CoorsTek for $245 million on Dec. 31. The shares rose 3.8 percent to 39.98 euros.
Lagardere increased 9.4 percent to 33.72 euros, the biggest gain in more than two years. The company is in exclusive talks to sell its international magazine business, including Car and Driver and the foreign editions of Elle, to Hearst Corp. The negotiations will remain exclusive until Jan. 30 for an all-cash deal, the companies said.
JCDecaux advanced 2.4 percent to 23.58 euros. The world’s second-largest seller of outdoor advertising doesn’t “feel any deceleration” in its Chinese business, co-Chief Executive Officer Jean-Charles Decaux told BFM Radio today.
The Neuilly-sur-Seine, France-based company nonetheless wants to avoid “overexposure” to the Chinese market at the expense of other emerging economies like India, he said.
Saipem SpA (SPM), Europe’s largest oilfield-services provider, and Technip SA (TEC), the region’s second-biggest, advanced 2.3 percent to 37.68 euros and 2.9 percent to 71.09 euros, respectively as oil rose to its highest price in 27 months.
Jeronimo Martins SGPS SA advanced for the first day in eight, rising 4.1 percent to 11.9 euros. Natixis Securities upgraded the Portuguese retailer to “buy” from “neutral.”
Deutsche Lufthansa AG (LHA) gained 3 percent to 16.85 euros after Germany’s largest airline said it will hire 4,000 employees in Germany this year as greater seating capacity and passenger numbers require more personnel.
Simcorp A/S (SIM) dropped 5.9 percent to 842 kroner. The Danish company whose asset-management software is used by Deutsche Bank AG and Sweden’s central bank said it doesn’t expect to meet its 2010 revenue forecasts. Revenue growth is projected to be 2 percent to 3 percent against previously announced 5 percent to 10 percent, it said in a statement on Dec. 31.
To contact the reporter on this story: Francesca Cinelli in Milan at firstname.lastname@example.org.