European Stocks Rise as Focus Shifts to Economic Growth
European (SXXP) stocks rose, with the Stoxx Europe 600 Index capping a weekly gain, as policy makers declared a turning point in the sovereign-debt crisis and shifted their focus to pulling the region out of a recession.
International Power Plc (IPR) and Barclays Plc (BARC) paced gains in utilities and lenders, respectively. The two industries were the best-performing groups on the Stoxx Europe 600 Index after Goldman Sachs Group Inc. raised its recommendation on them. SBM Offshore NV (SBMO) jumped 16 percent after saying it sees “buoyant” market conditions in offshore oil and gas. Belgacom SA declined after reporting a drop in earnings.
The Stoxx 600 (SXXP) rose 0.1 percent to 267.21 at the close of trading. The benchmark index gained 0.9 percent this week as the European (SXXP) Central Bank boosted lending to banks and euro-area leaders approved a second aid package for Greece.
“ The fact that the bailout plan has been validated is good news,” said Bruno Ducros, a fund manager at CamGestion in Paris, which oversees about $4 billion in stocks. “The problem isn’t resolved, but it gives us time for things to be done. Time is necessary and the measures have been taken. We are on the right path.”
The Stoxx 600 climbed 3.9 percent last month and rose 8.1 percent from the beginning of the year through Feb. 29. That was the biggest January-February increase since 1998 as optimism mounted that the euro area will contain its debt crisis and U.S. economic data beat estimates.
In a two-day summit that began yesterday in Brussels, euro- area leaders agreed to provide capital faster for the planned permanent bailout fund in a concession to international pressure to strengthen the region’s defenses against the debt crisis.
Today, the leaders committed to a pro-growth agenda even as they signed a deficit-control treaty at the 17th high-level meeting since the outbreak of the crisis.
“We’re not out of the economic crisis yet but we are turning the page of the financial crisis,” French President Nicolas Sarkozy told reporters after the Brussels summit.
National benchmark indexes rose in 15 of the 18 western European markets. France’s CAC 40 added less than 0.1 percent. Germany’s DAX declined 0.3 percent and the U.K.’s FTSE 100 lost 0.3 percent.
Spain, Italy, Germany
Spain raised its budget deficit target for 2012, breaching its commitment with its European partners. Prime Minister Mariano Rajoy announced a new deficit goal of 5.8 percent of gross domestic product compared with the 4.4 percent target previously agreed with the European Union.
Italy’s budget deficit narrowed more than economists forecast last year as spending cuts and tax increases helped shore up public finances even with the economy slipping into a recession.
In Germany, a report showed retail sales unexpectedly declined in January. Sales, adjusted for inflation and seasonal swings, fell 1.6 percent from December, when they increased 0.1 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 0.5 percent, the median of 22 estimates in a Bloomberg News survey.
Goldman raised its recommendations on utilities and banks to “overweight” from “neutral.” Utilities offer some of the highest dividend yields, the strategists wrote. The ECB’s long- term refinancing operation has improved cash supply for banks, they wrote.
International Power, Barclays
International Power, an operator of electricity plants on five continents, advanced 4.4 percent to 365.5 pence. Electricite de France SA, Europe’s biggest power generator, rallied 3.3 percent to 19.60 euros. Suez Environnement Co. (SEV), the region’s second-biggest water company, climbed 3.5 percent to 11.80 euros.
Barclays added 2.2 percent to 256.75 pence. The U.K.’s third-largest lender by assets took 8.2 billion euros of three- year loans from the European Central Bank to provide “funding stability” for its units in Spain and Portugal.
Commerzbank, Germany’s second-largest bank, gained 1.2 percent to 1.96 euros. BNP Paribas (BNP) SA, France’s biggest lender, rose 1.5 percent to 37.92 euros.
SBM Offshore jumped 16 percent to 15.36 euros, its biggest gain since October 2008. The world’s biggest supplier of floating oil and gas platforms said it sees “buoyant” market conditions in offshore oil and gas. The order portfolio was $16.9 billion at year end, the company said.
Repsol YPF SA, Spain’s biggest oil company, advanced 1.5 percent to 20.41 euros. Argentina’s President Cristina Fernandez de Kirchner refrained from announcing a plan to take over Repsol’s unit in that country. The local media had speculated about a takeover since the government last month threatened to take the “most vigorous measures” against the unit if it fails to meet domestic demand.
Belgacom (BELG) dropped 4.9 percent to 22.89 euros. The Belgian telephone company said full-year net income fell to 756 million euros from 1.27 billion euros for the prior year.
Rentokil Initial Plc (RTO), the world’s biggest pest-control company, lost 5.5 percent to 76 pence. The company reported a full-year pretax profit of 184.4 million pounds ($294 million), missing analyst estimates for 189.7 million pounds.
Kazakhmys Plc (KAZ), Kazakhstan’s biggest copper producer, retreated 5.8 percent to 1,000 pence. The stock was cut to “hold” from “buy” at Societe Generale SA.
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