European Stocks Advance Amid U.S. Budget Talks Optimism
European (SXXP) stocks climbed the most in more than two months as U.S. President Barack Obama expressed confidence that he will strike a deal with Congress on a new budget to avoid the so-called fiscal cliff.
HSBC Holdings Plc (HSBA) added 3.8 percent after the bank said it has held talks to sell its $9 billion stake in Ping An Insurance (Group) Co. BP Plc (BP/) gained 3.6 percent following a report that the oil company plans a 3.7 billion-pound ($5.9 billion) buyback. ING Groep NV (INGA) advanced 3.7 percent after the European Commission granted it more time to sell its insurance operations in the region.
The Stoxx Europe 600 Index rose 2.2 percent to 268.58 at the close, rebounding from its lowest level since Aug. 3, as the Republican U.S. House Speaker John Boehner said after the close of European trading last week that he has held constructive budget talks with Obama.
“This is good news and a relief,” said Bruno Ducros who helps oversee about $3.9 billion in equities at CamGestion in Paris. “The risk of a very strong slowdown in the U.S. had scared the market. It was a negotiation game before the election. Now, both sides are ready to agree.”
The S&P 500 erased its decline on Nov. 16 after Boehner also said he would accept increased government revenue coupled with spending cuts. Speaking at a news conference in Bangkok, Obama said “I am confident we can get our fiscal situation dealt with.”
Before Obama left for Asia, he met with senior Democrats and Republicans for talks to avoid a $607 billion-package of automatic tax increases and spending cuts that if allowed to come into force would push the country into a recession next year. Congress returns from its Thanksgiving holiday on Nov. 26.
The Stoxx 600 dropped 2.7 percent last week to its lowest level since Aug. 2 as concern mounted that U.S. lawmakers would fail to agree on a new budget. The gauge has lost 2.2 percent since the re-election of Obama on Nov. 6 set up a showdown with the Republican-controlled House of Representatives.
In the Middle East, Israel’s Defense Minister Ehud Barak said the army was prepared to invade the Gaza Strip for the first time in almost four years. Air strikes and rocket attacks have killed 96 Palestinians and three Israelis. Crude oil advanced for a second day in New York.
A U.S. report showed that sales of previously owned houses climbed to 4.79 million in October, near a two-year high. The median economist estimate in a Bloomberg survey had called for sales of 4.74 million.
National benchmark indexes climbed in every western- European market, except Iceland. The U.K.’s FTSE 100 rallied 2.4 percent. Germany’s DAX Index gained 2.5 percent and France’s CAC 40 advanced 2.9 percent.
HSBC climbed 3.8 percent to 618.3 pence for the biggest contribution to the Stoxx 600’s advance. Europe’s largest lender by market value said in a statement that it has held “discussions which may or may not lead to the sale of the shares” in China’s second-biggest insurer.
BP gained 3.6 percent to 431.6 pence. The Sunday Times reported that the company plans a buyback to lift its share price, without saying where it got the information. Mark Salt, a spokesman for the oil producer, declined to comment.
ING rose 3.8 percent to 6.76 euros after the European Commission extended the company’s deadline to sell the insurance businesses. ING pledged to repay state support from the Dutch government by 2015 under an amended restructuring plan.
SAS AB (SAS) soared 23 percent to 6.90 kronor after SAS Group won the backing of all eight of the unions that represent its employees to cut jobs and shrink the business. Scandinavia’s biggest airline seeks to extend credit lines and cut costs by 6 billion kronor ($891 million).
Copenhagen Airport A/S, the owner of the Nordic region’s biggest hub, added 1.1 percent to 2,000 kroner. SAS is the company’s largest customer.
Barclays Plc (BARC) climbed 6.6 percent to 249.8 pence after Goldman Sachs Group Inc. raised its recommendation for the shares to buy from neutral before the U.K.’s second-largest lender reveals details of its strategic review in February.
“If Barclays delivers on a business plan to generate returns that match the group’s cost of capital, the stock could offer sector-leading upside on our analysis,” Frederik Thomasen, an analyst, wrote in a note to clients dated Nov.16.
Hochtief AG jumped 5.1 percent to 37.82 euros, snapping a seven-day retreat, after the German builder announced the possible withdrawal of its chief executive officer, Frank Stieler, from the executive board.
The potential management change led to speculation that parent company Actividades de Construccion & Servicios SA will buy the shares it doesn’t already own in the builder, wrote analysts at Commerzbank AG in a note to clients. ACS holds 54 percent of Hochtief, according to data compiled by Bloomberg.
Ocado Group Plc (OCDO) surged 24 percent to 75 pence after the British online grocer extended a 100 million-pound credit line, the biggest of the company’s debts, by 18 months until July 2015. The retailer also said it will raise 35.8 million pounds through a sale of shares to existing investors at 64 pence apiece, ending doubts over the company’s immediate survival.
Nokia Oyj (NOK1V) surged 9 percent to 2.30 euros after the company said it received reports that its new Lumia 920 smartphone had sold out in many shops in Germany. Nokia started selling the device, which uses Microsoft Corp.’s Windows Phone 8 operating system, earlier this month.
Lonmin Plc (LMI) gained 9.3 percent to 515 pence. The world’s third-largest platinum producer has won support for a proposed $817 million stock sale from shareholders including its biggest investor, Xstrata Plc.
Fugro NV (FUR) sank 14 percent to 42.14 euros, its biggest drop in four years, after the Dutch oil-services company lowered its forecast for full-year profit to 280 million euros ($359 million). It cited low seismic-vessel utilization and a writedown at its subsea business.
The shares also fell after the company’s chief executive officer, Arnold Steenbakker, resigned because of a “difference of opinion” over the future direction of the company, according to a statement.
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