Europe Stocks Cap Longest Stretch of Gains Since March 16
European stocks climbed for a fourth day, for the longest stretch of gains in six weeks, as results from Vinci SA to Sandvik AB (SAND) topped estimates, outweighing slower-than-forecast U.S. economic growth.
Vinci, Europe’s biggest builder, gained 4.2 percent and Sandvik, the world’s largest maker of metal-cutting tools, surged 12 percent. Nobel Biocare Holding AG, the second-biggest producer of dental implants, jumped 4.2 percent after its first- quarter profit rose.
The Stoxx Europe 600 Index (SXXP) advanced 0.8 percent to 259.12 at the close in London, for a weekly increase of 0.5 percent. The gauge has rallied 6 percent this year as the European Central Bank boosted long-term loans to the region’s financial institutions and U.S. economic reports exceeded forecasts.
“Whilst I’m cautious on the outlook for markets, partly because of valuation, partly because of the economics, the positive news in the short-term from earnings is enough to encourage buyers,” said Gerard Lane, an equity strategist at Shore Capital Group Ltd. in Liverpool, England.
Companies in the Stoxx 600 that have reported results since April 10 have exceeded analysts’ per-share profit estimates by 6.9 percent on average, according to data compiled by Bloomberg.
In the U.S., gross domestic product rose at a 2.2 percent annual rate in the first quarter, Commerce Department figures showed. That followed a 3 percent pace in the prior quarter and compared with the 2.5 percent median forecast of economists surveyed by Bloomberg. Household purchases, which account for about 70 percent of the economy, increased 2.9 percent, exceeding projections.
Spain’s sovereign credit rating was cut for the second time this year by Standard & Poor’s on concern that the country will have to provide further fiscal support to banks as the economy contracts. S&P lowered the long-term grade to BBB+ from A, with a negative outlook and reduced the short-term rating to A-2 from A-1.
Meanwhile, Spanish Economy Minister Luis de Guindos said he expects foreign investors and real-estate funds to help offload property assets from banks’ balance sheets and ruled out using public funds to shore up the industry.
Italy sold 5.95 billion euros ($7.9 billion) of bonds today, less than the maximum for the auction, as the country paid 60 basis points more than a month ago to sell 10-year debt.
The Bank of Japan expanded its plan for government-bond purchases by 10 trillion yen ($124 billion) after the world’s third-largest economy showed signs of slowing and lawmakers pressed for more aggressive steps. The BOJ will boost its asset- purchase fund to 40 trillion yen by June 2013, compared with the previous target of 30 trillion yen by year-end.
Vinci (DG) jumped 4.2 percent to 35.56 euros after posting a 6 percent increase in the first-quarter sales, beating estimates. The construction company reported a revenue of 8.1 billion euros, compared with analysts’ forecasts for 7.64 billion euros.
CRH Plc (CRH), the world’s second-biggest building-materials maker, gained 3.9 percent to 1,268 pence. The stock was raised to overweight, the equivalent of buy, from underweight at JPMorgan Chase & Co.
French builder Eiffage SA (FGR) climbed 5.3 percent to 25.25 euros as construction shares rose. Hochtief AG (HOT), Germany’s largest builder, gained 4.1 percent to 44.44 euros. A gauge of construction shares was the best performer of the 19 industry groups on the Stoxx 600.
Sandvik advanced 12 percent to 104 kronor, the biggest jump since November 2008. The company reported first-quarter profit that beat analysts’ estimates and posted record order intake as demand grew in the Americas.
Nobel Biocare, the world’s second-biggest dental implant maker, rose 4.2 percent to 11.15 Swiss francs after it said first-quarter profit rose 9.5 percent on growth in North America as Europe continued to falter along with the economy.
Logitech International SA rallied 7.3 percent to 8.88 francs. Exane raised the stock to outperform, the equivalent of buy, from neutral. The company yesterday rose the most since 2007 as fourth-quarter net income increased ninefold.
Software AG (SOW), Germany’s second-largest software maker, added 6.2 percent to 26.23 euros. The stock was raised to buy from hold at MM Warburg & Co. The company reported first-quarter earnings before interest and tax of 54.8 million euros, in line with estimates for 54.7 million euros.
Man Group Soars
Man Group (EMG) surged 14 percent to 107 pence, snapping a two- day selloff. Societe Generale SA upgraded the world’s largest publicly traded hedge-fund manager to buy from hold after a 35 percent drop in the shares in recent weeks. UBS AG earlier in the week said the company is a “likely” takeover target.
Wacker Chemie AG, the German provider of polysilicon, jumped 10.2 percent to 63.25 euros. The German provider of polysilicon said first-quarter volumes rose almost 50 percent as demand rebounded, enabling all its production facilities to run at full capacity.
DNB ASA shares fell 11 percent to 62.8 kroner, the most since March 2009. Norway’s biggest bank said it will struggle to meet its financial goals as profit fell because of a hedging loss and rising costs.
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