European Stocks Are Little Changed as Fed Decision Looms
European (SXXP) stocks closed little changed as investors waited for the Federal Reserve to announce its decisions on interest rates and economic stimulus, while American lawmakers continued talks on a new budget.
PSA Peugeot Citroen surged 10 percent after a report that Algeria make acquire a stake in it. Wacker Chemie AG jumped 12 percent, the most since April 2009, after China announced a subsidy for solar projects. Barry Callebaut AG dropped 2.3 percent after saying it will buy a unit of Petra Foods Ltd.
The Stoxx Europe 600 Index rose less than 0.1 percent to 280.64 in London. The equity benchmark has rallied 1.8 percent so far this month as U.S. President Barack Obama struck a conciliatory note on talks to prevent more than $600 billion of automatic tax increases and spending cuts from coming into effect next year.
“The Federal Reserve has a commitment, both to try to stabilize inflation and get unemployment back down,” Stephen King, chief economist at HSBC Holdings Plc in London, told Mark Barton on Bloomberg Television. “In the absence of anything else, more quantitative easing is the inevitable consequence we’ll see later today. It’s not so much the idea of getting roaring growth coming back, it’s more about preventing another dip in the economy.”
The Federal Open Market Committee, which began a two-day meeting yesterday, will announce its interest-rate decision at 12.30 p.m. in Washington, followed by forecasts on economic growth, unemployment and inflation.
The Fed will expand economic stimulus by announcing $45 billion in monthly Treasury purchases, according to a Bloomberg survey of economists.
Republicans in Congress hardened their resistance to Obama’s proposed higher taxes for top earners and demanded a spending-cut plan, as lawmakers in both parties said it’s becoming less likely a budget agreement can be enacted before the Christmas holiday.
Obama’s plan is “mainly tax hikes,” House Speaker John Boehner said. “We’ve got some serious differences.”
In Asia, Japan’s machinery orders gained 2.6 percent in October from September, the Cabinet Office said in Tokyo. The median estimate of 25 economists surveyed by Bloomberg News had called for a 3 percent increase.
National benchmark indexes advanced in 12 of the 18 western European markets. The U.K.’s FTSE 100 gained 0.4 percent, while France’s CAC 40 was little changed. Germany’s DAX rose 0.3 percent.
Peugeot jumped 10 percent to 5.42 euros after La Tribune reported that Algeria may take a stake in Europe’s second- largest carmaker. Francois Hollande’s envoy Jean-Pierre Raffarin discussed a possible investment when he visited the North African country in November, the paper said.
Separately, Peugeot said it will eliminate 1,500 job positions in addition to the 8,000 announced in July. The auto company, whose shares have plummeted 49 percent so far this year, will make the cuts by not replacing people who leave, according to spokesman Jonathan Goodman.
Wacker Chemie AG (WCH), the second-biggest maker of solar-grade silicon, surged 12 percent to 48.61 euros. China’s ministry of science and technology announced a second round of solar subsidies for this year, identifying projects with 2.8 gigawatts of power as eligible for state aid.
KBC Groep NV (KBC) gained 4.9 percent to 23.44 euros after Morgan Stanley raised its recommendation on Belgium’s biggest bank and insurer by market value to overweight, the equivalent of buy, from equal weight. Exane BNP Paribas SA upgraded the stock to outperform from neutral.
TomTom NV (TOM2) advanced 5.7 percent to 4.06 euros. Apple Inc. may seek to buy the supplier of navigation applications for the iPhone 5, Hans Slob, an analyst at Rabobank International, wrote in a report.
Barry Callebaut AG (BARN) dropped 2.3 percent to 919 Swiss francs after saying it will buy Singapore-based Petra Foods’ cocoa- ingredients unit for $950 million. The deal, scheduled to be completed in mid-2013, will be the biggest acquisition made by the Swiss maker of bulk chocolate.
Imagination Technologies Group Plc (IMG), the U.K. maker of chip technology for tablets and smart phones, slid 5.2 percent to 425 pence. The company’s operational expenditure has lowered its profit margins, Liberum Capital Ltd. said in a note.
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