European Stocks Climb; Volkswagen, Saint-Gobain Shares Advance
European stocks rose, paring this week’s drop on the benchmark Stoxx Europe 600 Index, as earnings at companies from Volkswagen AG to Cie. de Saint-Gobain SA reassured investors that the global economic recovery is intact.
Volkswagen surged 6.2 percent as the maker of Beetle cars said increased sales in China drove a sevenfold surge in profit last year. Saint-Gobain rallied 5.5 percent after its chief executive officer told analysts that net income will advance this year. Telecom Italia SpA gained 5.2 percent after Italy’s largest phone company forecast that its dividend will increase at an annual pace of 15 percent through 2013.
The Stoxx 600 rose 1.3 percent to 284.12 at the 4:30 p.m. close in London. Even so, the gauge has declined 2.4 percent since peaking at its highest level since August 2008 last week. The measure had the biggest weekly drop since July, trimming this year’s advance to 3 percent.
“Equities are still looking attractive against fixed- income assets,” said Andy Lynch, who manages about $1.9 billion at Schroder Investment Management Ltd. in London. “There’s been a stabilization in the global economy.”
London Stock Exchange Group Plc resolved a “market data issue” that forced LSE to halt trading from 8 a.m. today. LSE resumed trading on its main market at 12:15 p.m.
Libyan leader Muammar Qaddafi’s violent response to anti- government protests has triggered the biggest weekly gain in oil prices in two years. In the six weeks since Tunisia’s Zine El Abidine Ben Ali fled his country, popular uprisings across the Middle East and North Africa have unseated Egypt’s Hosni Mubarak and threaten to do the same to Qaddafi.
European Stocks Rally
National benchmark indexes climbed in 16 of the 18 western European markets today. France’s CAC 40 Index rallied 1.5 percent, while the U.K.’s FTSE 100 Index rose 1.4 percent and Germany’s DAX Index advanced 0.8 percent.
European equities extended their gains today as the Thomson Reuters/University of Michigan final sentiment index of U.S. consumer confidence climbed to 77.5 in February from 74.2 in January. Economists had predicted a reading of 75.5, according to the median forecast in a Bloomberg News survey.
In the U.K., the economy shrank more than initially estimated in the fourth quarter, complicating the task of Bank of England policy makers as officials split over interest rates. Gross domestic product fell 0.6 percent from the previous three months, compared with an initial estimate of a 0.5 percent drop.
Even after this week’s tumble, the Stoxx 600 has still rallied 80 percent since March 2009 as reports showed an improving global economy and as corporate profits beat analysts’ estimates. About fifty-seven percent of the 228 companies in the gauge that have reported results since Jan. 10 posted per-share earnings that topped the average analyst projection, according to data compiled by Bloomberg.
Volkswagen surged 6.2 percent to 119.40 euros as Europe’s biggest automaker said profit surged sevenfold last year and forecast growth will accelerate this year. Net income for 2010 increased to 6.84 billion euros ($9.4 billion), beating the 4.96 billion-euro average estimate of six analysts surveyed by Bloomberg.
Saint-Gobain climbed 5.5 percent to 43.03 euros after Chief Executive Officer Pierre-Andre de Chalendar said net income at Europe’s biggest supplier of building materials will “significantly” increase in 2011. He also said that energy and raw material costs will “probably” rise in 2011 more than they did in 2010.
Telecom Italia advanced 5.2 percent to 1.10 euros after the company said 2010 profit doubled, boosted by the consolidation of its Argentine unit and a one-off tax credit. Net income of 3.12 billion euros topped the 2.43 billion euros average estimate of 22 analysts surveyed by Bloomberg.
CGGVeritas, the world’s largest seismic surveyor of oilfields, was among the best performers on the Stoxx 600, soaring 9.8 percent to 26.14 euros, its highest price since September 2008. The company’s fourth-quarter net loss narrowed to $35 million from $411 million a year earlier.
Valeo SA surged 9.6 percent to 44.72 euros as France’s second-largest car-parts maker posted a full-year profit because of an Asian-led recovery in auto demand, beating analysts’ estimates and its own forecasts. Chief Executive Officer Jacques Aschenbroich said Valeo will raise its medium-term financial targets next month, in an interview published in French newspaper Les Echos today.
Eiffage SA rose 8.5 percent to 43.8 euros as France’s third-largest construction company estimated that sales this year will increase 3 percent to 13.7 billion euros.
Suedzucker AG, the world’s largest sugar refiner, rallied 3.2 percent to 20.64 euros as the EU said it plans to release 500,000 tons of non-quota sugar onto EU markets.
Deutsche Telekom Falls
Deutsche Telekom AG sank 1.8 percent to 9.74 euros after Europe’s largest telecommunications company reported an unexpected loss for the fourth quarter. Adjusted earnings before interest, taxes, depreciation and amortization dropped to 4.55 billion euros from 5.07 billion euros a year earlier. That missed the 4.7 billion-euro average profit estimate of 19 analysts compiled by Bloomberg.
Lloyds Banking Group Plc plunged 4.5 percent to 62.9 pence after Britain’s biggest mortgage lender reported its first full- year pretax profit since before the credit crisis as writedowns fell by almost half.
To contact the reporter on this story: Adam Haigh in London at firstname.lastname@example.org