European Stocks Rise as Spanish, French Borrowing Costs Drop; Veolia Jumps
European (SXXP) stocks rose, extending the Stoxx Europe 600 Index’s best start to a year since 1998, as Spanish and French borrowing costs dropped and a report showed initial jobless claims fell to a four-year low in the U.S.
Veolia Environnement SA, the world’s biggest water utility, jumped the most since Oct. 2008. Adecco SA (ADEN), the world’s largest provider of temporary workers, surged 8.5 percent after reporting better-than-expected earnings. Vivendi SA (VIV) tumbled 10 percent, its biggest plunge in nine years, after forecasting that profit growth will only resume in 2014.
The Stoxx 600 (SXXP) advanced 1 percent to 267.06 at the close. The gauge climbed 3.9 percent last month and rose 8.1 percent from the beginning of the year through yesterday. That was the biggest January-February increase since 1998 as optimism mounted that the euro area will contain its sovereign-debt crisis and U.S. economic data beat estimates.
“The Spanish auction went well and Italian yields moving below 2 percent is very positive,” said Trung-Tin Nguyen, a hedge-fund manager at TTN AG in Zurich. “This helps the overall sentiment.”
Spain and France sold 12.5 billion euros ($16.7 billion) of bonds as yesterday’s European Central Bank loans to banks helped spur demand for debt. The rate on Italy’s two-year notes dropped below 2 percent for the first time since October 2010.
U.S. Jobless Claims
In the U.S., a Labor Department report showed initial jobless claims fell last week to a level matching a four-year low, dropping to 351,000. That’s the lowest since March 2008 and fewer than the average economist forecast of 355,000.
Separate figures showed personal spending rose 0.2 percent in January and incomes climbed 0.3 percent.
The Institute for Supply Management’s factory index fell to 52.4 in February from 54.1 in January. Fifty is the dividing line between growth and contraction. Economists (NAPMPMI) surveyed by Bloomberg News had projected the gauge would climb to 54.5.
China’s manufacturing improved for a third straight month in February, signaling that the world’s second-biggest economy is maintaining momentum amid the euro area’s crisis.
The purchasing managers’ index rose to 51.0 from 50.5 in January, China’s statistics bureau and logistics federation said today. That’s the highest level since September. Economic data in the first two months are distorted by the Chinese New Year holiday.
National Benchmark Indexes
National benchmark indexes climbed in all of the 18 western-European (SXXP) markets, except Norway. Germany’s DAX Index rose 1.3 percent. France’s CAC 40 Index gained 1.4 percent and the U.K.’s FTSE 100 Index added 1 percent.
Euro-area finance ministers authorized the European Financial Stability Facility to issue bonds for the Greek debt swap, the so-called private-sector involvement.
“Ministers authorize the issuance by EFSF of bonds to finance the euro area’s contribution to the PSI exercise and the repayment of accrued interest on Greek government bonds,” Luxembourg’s Jean-Claude Juncker, who leads the group of euro- area finance ministers, said today in a statement.
Greece committed to 3.2 billion euros of extra austerity measures and negotiated terms for the biggest sovereign-debt restructuring in history to secure the new financing.
Greek Prime Minister Lucas Papademos rejected a call to appoint an EU official to oversee Greece’s economy.
Adecco Shares Rally
Adecco surged 8.5 percent to 49.18 Swiss francs. The world’s largest provider of temporary workers increased its dividend by 64 percent to 1.80 francs a share after fourth- quarter net income of 133 million euros beat the average analyst estimate of 119.3 million euros.
Cable & Wireless Worldwide Plc (CW/) soared 15 percent to 31.98 pence after Tata Communications Ltd. said it may make a cash offer for the company and may decide on a transaction by the end of the month.
WPP Plc (WPP) gained 3 percent to 827.5 pence after the world’s largest advertising agency reported that revenue rose to 10 billion pounds ($16 billion) in 2011. Analysts had estimated sales of 9.96 billion pounds. WPP predicted that revenue will grow 4 percent in 2012, faster than the industry average, because of its position in emerging markets.
Vivendi slumped 10 percent to 14.50 euros after the owner of the world’s largest music and video-game companies predicted that profit will not grow until 2014 as Iliad SA’s entry into France’s mobile-phone market puts pressure on its SFR wireless unit. Iliad has been allowed to compete on excessively favorable terms, Vivendi said.
Aixtron SE dropped 7.3 percent to 11.55 euros after the company reported an unexpected fourth-quarter loss before interest and taxes of 16.9 million euros. Aixtron also cut its dividend payout by 58 percent. The company said it was “unable to offer a precise revenue and Ebit-margin guidance.”
PSA Peugeot Citroen (UG) slid 3.9 percent to 14.47 euros after Moody’s Investors Service cut the carmaker’s credit rating to junk. Peugeot announced a broad alliance with General Motors Co. yesterday that will include joint purchasing and vehicle development in an effort to revitalize their European operations.
Rexel SA (RXL) dropped 2.8 percent to 16.08 euros. Ray Investment SARL, the largest investor in the French electrical-equipment distributor, sold 30 million Rexel shares at 15.75 euros apiece.
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