European Stocks Advance as Leaders Weigh Cyprus Fate
European stocks climbed, snapping a three-day loss for the benchmark Stoxx Europe 600 Index, as the region’s policy makers weighed options for keeping Cyprus in the euro area.
Deutsche Bank AG and BNP Paribas SA paced a rebound in banks, both rising at least 1 percent. U.K. homebuilders rallied as Chancellor of the Exchequer George Osborne announced a new program to support British housing. Rheinmetall AG lost 6.9 percent after forecasting lower earnings in 2013.
The Stoxx 600 advanced 0.3 percent to 296.5 at the close of trading, after falling 1 percent in the past three days. The gauge retreated yesterday before Cypriot lawmakers voted on the 5.8 billion-euro ($7.5 billion) bank-deposit levy which was rejected after the close of trade.
Cyprus is “not a really major economic issue,” Laurence D. Fink, chief executive officer of BlackRock Inc., told Susan Li on Bloomberg Television in Hong Kong. “It’s a $10 billion issue. To me, this is just temporary. I think Cyprus was just one of the elements that people are saying ‘let me pause here’. We are going through a digestive stage right now.”
National benchmark indexes advanced in 15 of the 18 western European markets. The U.K.’s FTSE 100 slipped 0.1 percent, Germany’s DAX climbed 0.7 percent and France’s CAC 40 jumped 1.4 percent.
Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene quickly to put together a new package for Cyprus, after the rejection of the levy threw an earlier bailout plan into limbo.
The European (SXXP) Central Bank, whose Governing Council meets today in Frankfurt, is likely to delay the decision on supplying emergency funds to Cypriot banks, two people familiar with the matter said.
Policy makers don’t need to vote on whether to extend or halt Emergency Liquidity Assistance to Cypriot banks at their two-day meeting that ends tomorrow, the people said.
Kathimerini reported that a preliminary deal has been reached to sell Cyprus Popular Bank to Russian investors, paving the way for a reduction of 4 billion euros in the country’s financing needs. Spokesman Christos Stylianides told Bloomberg News that no deal had been reached.
Deutsche Bank paced a rebound in euro-area lenders, gaining 1.4 percent to 32.44 euros. The shares snapped a three-day decline even as Germany’s largest bank said it raised its litigation reserves 33 percent to 2.4 billion euros.
BNP Paribas SA rose 3.1 percent to 42.24 euros and Banco Bilbao Vizcaya Argentaria SA added 2.4 percent to 7.40 euros. A gauge of the euro-area’s largest banks rallied 2.3 percent after falling 6.8 percent over the previous three sessions.
In the U.K., George Osborne told Parliament in his annual budget that the forecast for economic growth this year was cut by half to 0.6 percent as he lowered corporation tax and set out an updated central-bank remit to aid Britain’s recovery.
The Chancellor also announced a new Help-to-Buy program to support the housing industry. He committed 3.5 billion pounds ($5.3 billion) to help first-time buyers purchase newly built houses and offered guarantees sufficient to support 130 billion pounds of mortgages.
Taylor Wimpey Plc paced a rally in homebuilders, climbing 6.1 percent to 90.85 pence, its highest price since May 2008. Persimmon Plc rallied 4 percent to 1,010 pence, the highest since November 2007. Barratt Developments Plc jumped 6.6 percent to 255.6 pence, the highest price since April 2008.
Vivendi SA jumped 4.4 percent to 16.22 euros, the biggest gain in four months, after people familiar with the matter said it’s considering spinning off telecommunications provider SFR, its biggest unit.
Mediaset (MS) SpA gained 5.5 percent to 1.65 euros after Goldman Sachs Group Inc. raised its recommendation for the shares to neutral from sell, citing their recent drop. The stock has tumbled 19 percent since Jan. 18.
Elementis Plc (ELM) climbed 3.8 percent to 275 pence, its highest price since at least 1988, after JPMorgan Chase & Co. upgraded the chemical company to overweight, equivalent to a buy rating. The brokerage also raised its price estimate by 50 percent to 300 pence.
Dufry AG advanced 3.3 percent to 120.50 Swiss francs as UBS AG raised its recommendation for the operator of duty-free shops to buy from neutral. The bank increased its price target to 138 francs.
Royal Imtech (IM) NV climbed 2.6 percent to 10.01 euros after saying that its financial restructuring is on track as its lenders agreed to continue the current financing arrangements. The Dutch provider of 2012 London Olympics stadium infrastructure also said the remaining 200 million euros of a bridging loan will become available to company.
Rheinmetall tumbled 6.9 percent to 38.14 euros after the engineering group forecast earnings before interest and taxes will fall to as low as 240 million euros, missing the average analyst estimate of 295 million euros. The company cited restructuring related costs.
ThyssenKrupp AG lost 2.2 percent to 16.99 euros after Dow Jones reported that offers for the company’s steel plants in Brazil and Alabama came in below its expectations. The sale could cause further writedown of about $1.3 billion because the bids are below the current book value of $5 billion, Dow Jones said, citing two people familiar with the transaction.
Metro AG dropped 2.4 percent to 22.38 euros. Germany’s biggest retailer forecast a decline in operating income in the first nine months of 2013, citing investment in its Cash & Carry unit and a challenging economy in southern and eastern Europe.
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