European Stocks Advance as Akzo, Apple Beat Estimates; KPN Sinks
Akzo Nobel soared 4 percent after the world’s biggest maker of paints reported increased first-quarter profit. William Hill Plc (WMH) surged 7.5 percent as the bookmaker’s operating income rose. Finnish steelmaker Rautaruukki Oyj (RTRKS) rallied the most since July after forecasting higher revenue and prices. Royal KPN NV sank 8.3 percent after lowering its outlook.
The Stoxx 600 advanced 0.5 percent to 280.47 at the 4:30 p.m. close in London. The gauge has risen 1 percent this week after results from Intel Corp. to PSA Peugeot Citroen and L’Oreal SA spurred investor optimism in the economic recovery. European markets will be closed for a holiday tomorrow.
“Better-than-expected earnings do give confidence the recovery is accelerating, especially when companies lift their guidance for the next quarter,” said Markus Huber, head of German sales trading at ETX Capital in London. “Accelerating economic growth should be able to overcome the rise in commodity prices and be moderately impacted.”
Of the 35 companies in the Stoxx 600 that have reported earnings since April 11, 22 have beaten analyst estimates for per-share profit, according to data compiled by Bloomberg. In the S&P 500, 81 percent have topped projections.
Apple, the maker of the iPhone and iPad, said net income in its fiscal second quarter rose to $5.99 billion, or $6.40 a share, from $3.07 billion a year earlier. Sales jumped 83 percent to $24.7 billion. Analysts had predicted profit of $5.39 a share on sales of $23.4 billion, according to the average of estimates compiled by Bloomberg. General Electric Co. and Morgan Stanley also released results that exceeded projections.
“Earnings are good and give investors confidence so European equity markets could rise in the short term,” said Markus Steinbeis, head of equity portfolio management at the Unterfoehring, Germany-based unit of Pioneer Investments KGmbH, which oversees about $221 billion globally. “I don’t think this huge rally will continue in the summer months. The environment is getting riskier and riskier.”
European stocks pared their advance as the Federal Reserve Bank of Philadelphia’s general economic index for April fell more than forecast. Even so, the Conference Board’s gauge of U.S. leading indicators increased for a ninth month in March, signaling higher fuel costs will fail to derail the expansion.
National benchmark indexes rose in 11 of the 15 western European markets that were open today. Germany’s DAX climbed 0.6 percent and France’s CAC 40 added 0.4 percent, while the U.K.’s FTSE 100 fell less than 0.1 percent. Exchanges in Norway, Denmark and Iceland were closed for a holiday.
Akzo Nobel jumped 4 percent to 52.48 euros, the highest price since June 2008. The company reported first-quarter net income of 128 million euros ($187 million). That topped the average analyst estimate of 104.7 million euros, based on 12 estimates compiled by Bloomberg.
William Hill surged 7.5 percent to 213.3 pence, the largest advance in six months and the biggest gain in the Stoxx 600 today. The U.K. bookmaker with about 2,350 shops said first- quarter net revenue gained 11 percent, boosted by a 26 percent increase in online sales.
Rautaruukki rose 5.7 percent to 17.52 euros, the biggest gain since July 16. The Finnish steelmaker said full-year sales will grow about 25 percent, compared with an earlier forecast of 20 percent to 25 percent.
Autonomy Corp. posted the second-biggest rally in the Stoxx 600, rising 7.4 percent to 1,620 pence. The U.K.’s second- largest software company reiterated that analyst estimates for 2011 are “conservative” as customers increase expenditure. Net income advanced 9 percent to $54.2 million, beating analyst estimates compiled by Bloomberg.
Banking shares rose 1.5 percent as a group, the biggest gain among 19 industries in the Stoxx 600, as Morgan Stanley reported first-quarter earnings that beat estimates after trading revenue more than doubled from the fourth quarter.
HSBC Holdings Plc (HSBA), Europe’s largest bank, gained 1.2 percent to 659.6 pence, while BNP Paribas (BNP) SA, France’s biggest lender, advanced 1.7 percent to 51.42 euros. UniCredit SpA rallied 4.5 percent to 1.69 euros, ending the longest falling streak since January.
Lafarge SA (LG) gained 1.6 percent to 47.14 euros as the world’s largest cement maker was raised to “buy” from “neutral” at Goldman Sachs Group Inc. CRH Plc (CRH) climbed 3.7 percent to 16.42 euros after the second-biggest building-materials maker was also upgraded to “buy” from “neutral” by Goldman Sachs. The company was also rated “overweight” in new coverage at JPMorgan Chase & Co.
Dragon Oil Plc (DGO) soared 3.7 percent to 566 pence after the explorer focused on Turkmenistan said it plans to increase production as much as 20 percent this year, more than previously forecast, on new pipeline infrastructure.
KPN tumbled 8.3 percent to 10.78 euros, the biggest decline since October 2008. The largest Dutch telephone company cut its 2011 profit forecast and plans to eliminate as much as 25 percent of its workforce in the Netherlands by 2015.
Accor SA (AC), Europe’s largest hotel company, sank 4 percent to 30.20 euros after competitor Marriott International Inc. posted first-quarter earnings that missed analyst estimates.
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