European Stocks Advance; Deutsche Telekom, Repsol Climb
Deutsche Telekom AG added 3 percent and Repsol YPF jumped 8.2 percent as the companies posted earnings that exceeded analysts’ forecasts. National Bank of Greece SA (ETE) led gains by lenders. KBC Groep NV (KBC) surged after reporting a smaller-than-estimated drop in profit. Bankia SA (BKIA) slid after Spain’s government said it will take over the lender.
The Stoxx Europe 600 Index climbed 0.6 percent to 251.1 at the close in London, erasing an earlier decline of as much as 0.7 percent and snapping two days of losses. The benchmark measure has still slumped 7.8 percent since its highest level this year on March 16.
“Earnings continue being very supportive,” said Henk Potts, an equity strategist at Barclays Wealth in London, which oversees $239 billion. “They continue to beat estimates despite the very difficult environment. Corporate positions still look very bright and profitability very strong. Valuations are undemanding.”
The Stoxx 600 trades at 10.4 times its estimated earnings, according to data compiled by Bloomberg. The volume of shares changing hands on the equity benchmark was 22 percent higher than the average of the last 30 days.
The gauge fell yesterday to its lowest level in almost four months as Greece’s politicians struggled to agree on a government and as Spanish credit risk surged.
Greece Seeks Government
Greece’s former finance minister, Evangelos Venizelos, received a three-day mandate from President Karolos Papoulias today to attempt to form a coalition government. Alexis Tsipras, the leader of the left-wing Syriza coalition, yesterday abandoned his attempt to form a government, forcing Papoulias to turn to Pasok, which came third in the elections.
The Democratic Left party, which has 19 seats in Parliament, criticized Syriza, saying Tsipras was pushing the country toward another election.
“Contradictory statements by Syriza members on the Greek economy, its insistence on canceling the bailout agreement, which is a credit event and constitutes a break with the euro area, complicates political cooperation,” the Democratic Left said in a statement on its website.
Venizelos said his views were very close to those of Democratic Left party leader Fotis Kouvelis, according to statements carried live on state-run NET TV.
China’s Exports, Imports
In China, exports and imports rose slower in April than economists had estimated, adding pressure on the government to ease policies to spur expansion.
Overseas shipments climbed 4.9 percent from a year earlier, the customs bureau said on its website today. That compared with the 8.5 percent median estimate in a Bloomberg News survey of 33 economists. Import growth of 0.3 percent trailed forecasts for a 10.9 percent gain. The trade surplus was $18.4 billion, almost double the average estimate of $9.9 billion.
In the U.K., the Bank of England’s nine-member Monetary Policy Committee halted its program of bond purchases at 325 billion pounds ($525 billion), ending a second round of stimulus, as predicted by 43 of 51 economists in a Bloomberg News survey.
In the U.S., a Labor Department report showed that first-time claims for jobless benefits fell to 367,000 last week from a revised 368,000 a week earlier.
National benchmark indexes rose in every western-European market except Switzerland and Iceland. France’s CAC 40 added 0.4 percent and the U.K.’s FTSE 100 rose 0.3 percent. Germany’s DAX gained 0.7 percent. Spain’s IBEX 35 Index surged 3.4 percent while Greece’s ASE Index rallied 4.2 percent.
Deutsche Telekom Rallies
Deutsche Telekom climbed 3 percent to 8.80 euros. Europe’s second-largest telephone company reported first-quarter earnings before interest, taxes and depreciation that slipped 0.1 percent to 4.48 billion euros ($5.8 billion). The average forecast of 21 analysts surveyed by Bloomberg had called for 4.4 billion euros of profit on that measure.
Separately, the company was said to discuss a merger of its T-Mobile USA Inc. unit with MetroPCS Communications Inc. Deutsche Telekom has considered a stock-swap transaction that would give it control over the combined entity, said two of the people, who declined to be identified.
Other options include an initial public offering or an outright sale of T-Mobile USA, the people said, adding that Deutsche Telekom has held talks with other companies.
Repsol Shares Surge
Repsol YPF rallied 8.2 percent to 14.21 euros, its largest gain in two years. Spain’s biggest oil company beat analyst estimates for first-quarter earnings, posting profit of 792 million euros as higher oil prices buoyed income from its drilling and production operations.
National Bank of Greece, the country’s largest lender, led bank shares higher, surging 12 percent to 1.57 euros. The shares had tumbled 17 percent over the previous three days.
UniCredit SpA (UCG) gained 6.8 percent to 2.84 euros. Italy’s biggest bank said first-quarter profit rose 13 percent to 914 million euros as higher trading income more than offset a drop in fees and lending.
Banco Santander SA (SAN), Spain’s largest lender, increased 6 percent to 4.92 euros. Deutsche Bank AG (DBK), Germany’s biggest bank, gained 2.7 percent to 31.23 euros. A gauge of bank shares was the best performer among the 19 industry groups in the Stoxx 600, climbing 2.6 percent.
KBC, Barratt Developments
KBC Groep soared 9.4 percent to 14.44 euros after reporting a smaller-than-estimated drop in first-quarter profit because of capital gains at its Belgian life insurance business and lower loan losses everywhere except Ireland.
Barratt Developments Plc (BDEV), the U.K.’s largest housebuilder by volume, jumped 5.4 percent to 126.4 pence.
“We have had our strongest spring selling season for five years,” Chief Executive Officer Mark Clare said. “We’re ahead on achieving our objectives of improving profitability and reducing net debt.”
Bankia slid 1.2 percent to 2.11 euros after Spain’s Economy Ministry said its bank bailout fund will convert its 4.5 billion euros of preferred shares in Bankia’s parent company Banco Financiero y de Ahorros, or BFA, into voting shares. The action will give it a controlling stake of 45 percent in Bankia, the ministry said, adding that the government will provide the capital that’s “strictly necessary” to clean up the lender.
Skanska sank 5.3 percent to 103.50 kronor. The Nordic region’s biggest construction company plunged the most since August as weak demand for homes in Europe and cost overruns caused a loss at its residential-development unit.
Reckitt Benckiser Group Plc (RB/), the maker of Dettol kitchen spray, fell 3.5 percent to 3,440 pence. The company’s biggest shareholder sold a 1.2 billion-pound stake at a discount.
JC Decaux SA tumbled 7.3 percent to 19.44 euros. The French billboard company said a slowdown across Europe and in China would hinder second-quarter revenue growth.
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