European Stocks Advance for Third Day; Insurers, Energy Companies Increase
European stocks rose, extending the biggest three-day rally for the benchmark Stoxx Europe 600 Index in 15 months, after last week sliding to the cheapest valuation in more than two years.
Nokia Oyj jumped 9.1 percent after Google Inc. agreed to buy U.S. rival Motorola Mobility Holdings Inc. for about $12.5 billion. Swatch Group AG (UHR) paced gains among Swiss exporters as the franc headed for its largest three-day decline on record against the euro. Michael Page International Plc (MPI) tumbled 8.1 percent after the recruiter’s earnings missed analyst estimates.
The Stoxx 600 advanced 0.2 percent to 237.85 at the 4:30 p.m. close in London after swinging between gains and losses at least 20 times today. The gauge has rallied 6.4 percent over the past three days after a global equity rout left stocks trading at the cheapest since March 2009 amid concern the economic recovery is stalling.
“I see plenty of excellent buying opportunities amongst defensive and cyclical companies,” James Bevan, chief investment officer at CCLA Investment Management Ltd., said on Bloomberg Television. “I am not really worried about a double- dip recession.”
An 18 percent decline from this year’s high on Feb. 17 has left the Stoxx 600 trading at 9.7 times the estimated earnings of its companies, according to data compiled by Bloomberg. That compares with the average multiple of 12.1 over the past five years.
Global markets are stabilizing after a week of record swings in U.S. stocks that was sparked by S&P’s downgrade of its credit rating for the world’s largest economy. More than $6 trillion in market value has been wiped off global equities since July 24 amid concern the global economic recovery may be at risk.
A report today showed Japan’s gross domestic product shrank at an annualized 1.3 percent rate in the three months ended June 30. The median forecast of 25 economists surveyed by Bloomberg was for a 2.5 percent drop.
National benchmark indexes in Europe climbed in all 14 western European markets that were open. Germany’s DAX rose 0.4 percent, the U.K.’s FTSE 100 gained 0.6 percent and France’s CAC 40 increased 0.8 percent. Italy, Luxembourg, Austria and Greece were closed for a holiday.
Nokia, the world’s biggest maker of mobile phones by volume, jumped 9.1 percent to 4.09 euros after Google agreed to buy Motorola Mobility, gaining wireless patents and entering the hardware business. That was the largest gain since January 2010.
Swiss exporters advanced as the franc weakened against the euro, heading for its biggest three-day decline since the European currency’s 1999 debut, amid speculation Switzerland will take further action to counter recent gains. The SonntagsZeitung newspaper said the Swiss government and the central bank are in “intense” talks over setting a target for their currency.
Swatch, the world’s biggest watchmaker, added 3.1 percent to 371 francs and Cie. Financiere Richemont SA gained 2.4 percent to 44.08 francs.
Zurich Financial Services AG (ZURN) rallied 3.6 percent to 177.7 francs after both Credit Suisse Group AG and Keefe, Bruyette & Woods Inc. raised their recommendations for the Swiss insurer to “outperform.” The stock had tumbled 29 percent this year through the end of last week.
Aker Drilling ASA, controlled by billionaire Kjell Inge Roekke’s Aker ASA (AKER), jumped 96 percent to 26.20 kroner after Transocean Ltd. (RIG), the world’s largest offshore driller, offered to buy the company for 7.9 billion kroner ($1.4 billion), or 26.50 kroner a share.
Hochtief AG (HOT) climbed 3.3 percent to 49.60 euros after Australia’s Leighton Holdings Ltd. reiterated it expects to swing to profit this year. Australia’s biggest builder, 54 percent owned by Hochtief, boosted its work in hand 11 percent to a record A$46.2 billion ($48.1 billion) and repeated its forecast for an after-tax profit of between A$600 million and A$650 million for the current year.
Michael Page plunged 8.1 percent to 368 pence as the U.K. recruiter said gross profit growth is slowing in the banking industry. The company also reported a 26 percent drop in first- half pretax profit to 45.5 million pounds ($76 million), missing the average analyst estimate of 52.1 million pounds.
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