European Stocks Gain for Fourth Week; Prudential Rallies
European stocks advanced for a fourth week, the longest winning streak in almost three months, as the region’s leaders eased constraints on national budgets and U.S. retail sales and jobless-benefit claims pointed to a recovery in the world’s biggest economy.
SBM Offshore NV surged the most since 2008 after settling a dispute with Talisman Energy Inc. Prudential Plc (PRU) led insurers higher, gaining 14 percent, after raising its dividend. Commerzbank AG tumbled the most in almost four years after Germany’s second-largest lender said it will sell shares to repay stakes owned by Allianz SE and a government fund.
The Stoxx Europe 600 Index (SXXP) gained 0.7 percent to 297.46 this past week. The gauge slipped 0.4 percent yesterday, retreating from the highest level since June 2008. Spain sold 803 million euros ($1.05 billion) of debt at an extraordinary auction on March 14 and Italy issued 6.99 billion euros of securities the previous day. Ireland sold its first 10-year bond since receiving a European Union-led bailout three years ago.
“The key driver is still of course the international monetary policy from central banks,” said Andreas Lipkow, a senior market strategist at Kliegel & Hafner AG in Berlin. “The auctions for government bonds out of Spain, Italy and Ireland were a sign for investors that the situation in Europe is not as bad as they maybe thought. ‘Go with the flow’ is the theme right now.”
The Stoxx 600 has surged 6.4 percent this year as U.S. politicians agreed on a compromise budget and the Federal Reserve continued its bond-buying program. On March 14, the Standard & Poor’s 500 Index (SPX) of U.S. shares climbed to within two points of its 1,565.15 record close set in October 2007.
European Union leaders meeting in Brussels endorsed “structural” budgetary assessments, using code for granting countries such as France, Spain and Portugal extra time to bring down deficits. Still, balanced budgets remained the goal and there was no talk of large-scale spending programs.
In the U.S., applications for jobless benefits unexpectedly dropped to the lowest level in almost two months in the week ended March 9. Retail sales and industrial production rose more than forecast in February, separate reports showed.
National benchmark indexes climbed in in 12 of the 18 western European markets. Germany’s DAX Index rallied 0.7 percent, while France’s CAC 40 Index and the U.K.’s FTSE 100 Index added 0.1 percent. The Swiss Market Index (SMI) advanced 1.5 percent to the highest level since January 2008.
SBM Offshore surged 22 percent as the world’s biggest supplier of floating oil-production platforms settled a dispute over its Yme operation with Talisman. SBM will pay Talisman $470 million and book a $270 million charge on top of the $200 million set aside in December after the Yme platform was evacuated in July because of cracks found in the structure.
Prudential rallied 14 percent, the biggest gain in 15 months. The U.K.’s biggest insurer by market value boosted its dividend by 16 percent as profit beat estimates on rising income from Asian economies such as Indonesia, Singapore and Malaysia. Operating profit climbed 25 percent to 2.53 billion pounds ($3.8 billion) in 2012, the insurer said. That beat the 2.32 billion- pound median estimate of five analysts surveyed by Bloomberg.
Assicurazioni Generali SpA rose 2.1 percent after Italy’s biggest insurer also reported increased operating income.
A gauge of insurers was the best performer among the 19 industry groups in the Stoxx 600, gaining 2.4 percent.
Saipem SpA (SPM) surged 13 percent, the biggest jump since December 2008. Europe’s largest oil-service provider won contracts in north and west Africa valued at $1.1 billion.
Rentokil Initial Plc (RTO) added 8.4 percent after the world’s biggest pest-control company said adjusted pretax profit jumped 16 percent in the fourth quarter. Chief Executive Officer Alan Brown said he expects Rentokil will sustain the growth seen in the period throughout 2013.
Deutsche Lufthansa AG gained 5.7 percent, the largest increase since January. Europe’s second-biggest airline agreed to renew its short-haul fleet with 100 mostly fuel-efficient jets from Airbus SAS, as the airline seeks to cut costs.
Commerzbank plummeted 17 percent, the most since May 2009, after saying it will sell 2.5 billion euros of shares. Shareholders in the bank, which is 25 percent government-owned after receiving an 18.2 billion-euro bailout in 2009, will be asked to approve a reverse stock split on April 19 that will reduce the number of shares to 583 million from 5.83 billion.
Commerzbank Chief Executive Officer Martin Blessing bought 120,900 euros of shares on March 14.
ASM International NV dropped 10 percent, the biggest decline since August 2011. The Dutch semiconductor-service company sold an 11.9 percent stake in ASM Pacific Technology Ltd. for HK$4.27 billion ($550 million), falling short of investor anticipation of a full spinoff of the majority- controlled Asian business.
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