European Stocks Rise as Earnings Offset German Confidence
European stocks advanced as companies from ICAP (IAP) Plc to European Aeronautic Defence & Space Co. rallied after reporting earnings, offsetting German investor sentiment that gained less than forecast in May.
ICAP Plc surged the most in more than four years after posting full-year profit that exceeded its previous forecast. EADS advanced 3 percent after earnings beat analysts’ projections. Anglo American Plc and Glencore Xstrata Plc each retreated at least 1 percent as JPMorgan Chase & Co. cut its forecast for China’s economic growth.
The Stoxx Europe 600 Index added 0.4 percent to 305.66 at the close of trading, its highest level since June 2008. The equity benchmark has gained 9.3 percent so far this year amid confidence that central banks around the world will continue to add stimulus to support economic growth.
“You want to be present in Europe when you see a rally in the market, either triggered by good results or triggered by central bank policy,” Andrew Popper, a London-based global strategist at Beauclerc Advisory Services Ltd., told Francine Lacqua on Bloomberg Television. “At the same time, you have to be concerned about the overall economic picture.”
The Stoxx 600 pared earlier losses of as much as 0.5 percent as billionaire David Tepper, who runs hedge-fund firm Appaloosa Management LP, said in an interview on CNBC he is “definitely bullish” about markets.
German investor confidence rose in May less than forecast. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, increased to 36.4 from 36.3 in April. Economists forecast a gain to 40, according to the median of 38 estimates in a Bloomberg News survey. (GRZEWI)
Finance chiefs from the 27 members of the European Union met today in Brussels to discuss plans to create a banking union for the region. The European Central Bank’s Executive Board member Joerg Asmussen called today for the EU to create a central agency and a common backstop for handling failed banks by the “summer of next year.”
ICAP jumped 14 percent to 339.70 pence, the most since March 2009, as the world’s largest broker of transactions between banks posted a full-year pretax profit before exceptional items of 284 million pounds ($433 million). That was higher than the 280 million pounds the company had forecast March 27.
EADS gained 3 percent to 42.44 euros as the Airbus SAS parent posted first-quarter earnings before interest, taxes and one-time items of 741 million euros ($960 million), exceeding the 607 million euros projected by analysts in a Bloomberg survey.
Severn Trent Plc (SVT) soared 14 percent to 2,077 pence, its highest price since at least July 1991. The U.K.’s second-largest publicly traded water company said it received a takeover approach from a group comprising Borealis Infrastructure Management Inc., the Kuwait Investment Office and Universities Superannuation Scheme.
Pennon Group Plc, a U.K. waste and water company, advanced 4.4 percent to 695 pence. United Utilities Group Plc, the biggest publicly-traded water company, rallied 2.8 percent to 760.5 pence, its highest price since July 2008.
A gauge of commodity producers declined the most of the 19 industry groups in the Stoxx 600. JPMorgan lowered its forecast for China’s 2013 gross domestic product growth to 7.6 percent from 7.8 percent, citing weak domestic demand.
Anglo American slipped 1.7 percent to 1,550 pence and Glencore Xstrata declined 1.4 percent to 340.35 pence.
Aurubis AG plunged 7.4 percent to 45.65 euros, its biggest decline since January 2011. The world’s second-largest producer of refined copper posted second-quarter earnings before interest and taxes of 11 million euros, missing the average analyst forecast of 15.9 million euros.
Lonmin Plc tumbled 7.3 percent to 265.1 pence as the third-biggest platinum producer said workers refused to enter its Marikana mine in South Africa, halting operations. The Association of Mineworkers and Construction Union said a local organizer was shot dead on May 11.
Commerzbank AG declined 6.3 percent to 9.31 euros, its lowest price in more than two decades. Germany’s second-biggest bank said it is offering the right to buy 20 shares for every 21 held by investors at 4.50 euros apiece. That equates to a 55 percent discount to yesterday’s price, or 38 percent below the 7.28 euros a share theoretical price the stock would have following the offer. The shares will be offered from tomorrow until May 28, the bank said on its website.
GDF Suez SA, Europe’s largest utility by market value, fell 0.9 percent to 16.58 euros, paring earlier losses of as much as 4.4 percent. Groupe Bruxelles Lambert SA sold 65 million shares in GDF for 16.26 euros, less than yesterday’s closing price.
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