European Stocks Advance for Ninth Month; Bayer Advances
European (SXXP) stocks climbed, with the benchmark index rising for a ninth straight month, as European Central Bank President Mario Draghi and Federal Reserve Chairman Ben S. Bernanke signaled they would maintain monetary support.
Bayer AG (BAYN) increased to the highest price in more than a month after saying sales will rise 4 percent to 5 percent this year. Telefonica SA added 2 percent as Spain’s biggest phone company reported fourth-quarter earnings that beat analysts’ estimates. Royal Bank of Scotland Plc slid to its lowest level in two months after posting a wider full-year loss.
The Stoxx Europe 600 Index gained 1 percent to 289.94 at the close of trading, extending its advance this month to 1 percent, for its longest monthly winning streak since 1997. The benchmark has risen 3.7 percent this year as U.S. lawmakers agreed on a budget avoiding automatic fiscal changes that had threatened to push the world’s biggest economy into recession.
“Thanks to a strong mix of positive business results and signals of central banks remaining expansive, the upward trend on equity markets is strengthened and may continue,” said Daniel Gschwend, portfolio manager at Diem Client Partner AG in Zurich, which oversees more than 1 billion Swiss francs ($1.08 billion) in assets. “Looking at this long winning streak, however, I expect a substantial correction will soon be needed.”
Draghi signaled the bank has no intention of tightening monetary policy anytime soon with inflation projected to “significantly” undershoot its 2 percent target next year.
While the ECB’s balance sheet may shrink naturally as confidence returns to financial markets and banks repay emergency loans, policy makers are far from considering an exit from monetary stimulus, Draghi said at an event in Munich late yesterday.
Bernanke yesterday defended record stimulus to Congress, saying accommodation has helped reduce borrowing costs and spur growth. He also said the central bank may decide to hold bonds on its $3.1 trillion balance sheet to maturity as part of a review of its strategy for an exit from record monetary easing.
A Labor Department report showed that fewer Americans filed applications for unemployment benefits last week. Initial jobless claims fell by 22,000 to 344,000 in the week ended Feb. 23, compared with the median forecast of economists that called for 360,000 in a Bloomberg News survey.
The U.S. economy managed to barely expand in the fourth quarter. Gross domestic product grew at a 0.1 percent annual rate, up from a previously estimated 0.1 percent drop, revised figures from the Commerce Department showed today in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a 0.5 percent gain.
Italy is headed for a broad coalition government as bondholders pressure Pier Luigi Bersani and Silvio Berlusconi to set aside their rivalries and form a partnership, said Finance Undersecretary Gianfranco Polillo.
National benchmark indexes rose in all of the 18 western- European markets except Portugal today. France’s CAC 40 and Germany’s DAX both added 0.9 percent, while the U.K.’s FTSE 100 climbed 0.6 percent.
Bayer increased 2.7 percent to 75.86 euros after saying sales will rise to about 41 billion euros ($53.9 billion) this year. Fourth-quarter earnings before interest, taxes, depreciation, amortization and special items increased 18 percent to 1.83 billion euros from 1.54 billion euros a year earlier, in line with analysts’ estimates.
Telefonica (TEF) added 20 cents to 10 euros after reporting fourth-quarter earnings that beat analysts’ estimates as sales growth in Latin America helped to offset revenue declines in its domestic market. Operating income before depreciation and amortization fell 8.6 percent to 5.45 billion euros, compared with projections for 5.44 billion euros.
HSBC Holdings Plc (HSBA) gained 0.9 percent to 731.4 pence. Europe’s largest bank by market value may say pretax profit in 2012 rose 7.4 percent to $23.5 billion when it reports earnings on March 4, according to the median estimate of 26 analysts in a Bloomberg News survey.
Standard Chartered Plc (STAN) may say pretax profit last year climbed to $7.12 billion from $6.78 billion, according to the median estimate of 33 analysts. The stock increased 1.2 percent to 1,796 pence.
International Consolidated Airlines Group SA (IAG) rallied 7.9 percent to 239.2 pence, its highest price since July 26, 2011. Europe’s third-largest carrier had a full-year operating loss of 23 million euros, excluding one-time items, compared with a 485 million-euro profit a year earlier. Analysts had expected an 88 million-euro loss.
RBS (RBS) slid 6.6 percent to 323.9 pence. Britain’s biggest taxpayer-owned lender posted a wider full-year loss after it set aside a further 1.1 billion pounds ($1.6 billion) to compensate clients wrongly sold insurance and swaps. The net loss swelled to 5.97 billion pounds from 2 billion pounds in the year-earlier period, missing the average 5.1 billion-pound analyst estimate.
A gauge of mining-linked companies posted the second-worst performance on the Stoxx 600, with Anglo American Plc and Kazakhmys Plc declining 1.6 percent to 1,922 pence, and 8.6 percent to 619 pence, respectively.
The volume of shares changing hands in Stoxx 600-listed companies was 1.1 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
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