European Stocks Advance as Carmakers Climb; Ryanair Rises
European stocks advanced, extending the Stoxx Europe 600 Index’s highest level since June 2008, as the region’s carmakers rallied.
Peugeot SA and Volkswagen AG both gained more than 3 percent as Morgan Stanley raised its recommendation on European automobile companies. Ryanair Holdings Plc jumped the most in more than 1 1/2 years as Europe’s largest low-cost carrier said full-year profit rose 13 percent. Fresnillo Plc slid 3.3 percent as silver slumped to its lowest price since October 2010.
The Stoxx 600 rose 0.3 percent to 309.77 at the close of trading. The gauge rallied 1.2 percent last week, reaching its highest level since June 2008, as the Bank of England lifted its growth forecast for Europe’s third-biggest economy. Markets in Switzerland, Austria, Denmark, Norway, Iceland and Luxembourg were closed for the Whit Monday holiday today.
“Investors are waiting for more clues in terms of economic data and will be watching comments from Fed Chairman Ben Bernanke on Wednesday to determine where markets will go,” Stephane Ekolo, chief European strategist at Market Securities, wrote in a message.
The volume of shares changing hands in companies listed on the Stoxx 600 was 19 percent lower than the 30-day average, according to data compiled by Bloomberg.
Federal Reserve Chairman Bernanke testifies on the outlook for the U.S. economy to the Joint Economic Committee of Congress on May 22. The Fed will release the minutes of its April 30 to May 1 policy meeting on the same day.
National benchmark indexes gained in seven of the 12 western-European markets that opened today. The U.K.’s FTSE 100 climbed 0.5 percent to the highest level since 2000. France’s CAC 40 rose 0.5 percent, while Germany’s DAX added 0.7 percent.
Peugeot, Europe’s second-largest automobile producer by volume, jumped 5.9 percent to 7.56 euros. A gauge of vehicle manufacturers posted the best performance of the 19 industry groups in the Stoxx 600. Volkswagen AG added 3.2 percent to 173.85 euros, while Bayerische Motoren Werke AG, the world’s biggest luxury-car maker, advanced 2.9 percent to 74.02 euros.
Morgan Stanley raised its recommendation on European automobile manufacturers to overweight, similar to a buy rating, from neutral. The brokerage said that the trend of earnings downgrades for the industry may stop as sales improve in Europe’s largest economies.
Rheinmetall AG gained 4 percent to 39.62 euros after Deutsche Bank raised the maker of automotive parts to hold from sell. The brokerage forecast that European automakers will produce more cars and trucks in the second half of this year.
Ryanair (RYA) soared 6.9 percent to 6.77 euros, its biggest rally since September 2011, after reporting that net income rose to 569 million euros ($732 million) in the 12 months through March 31 from 503 million euros a year earlier. That beat the 560 million-euro average estimate of 19 analysts. Revenue climbed 13 percent to 4.33 billion euros.
The company also said that it will use more of its planes than usual next winter, increasing its number of passengers for the year to 81.5 million. That will lift its earnings to as much as 600 million euros.
Impregilo SpA surged 15 percent to 3.41 euros, its largest rally in more than five years, after winning a 1.7 billion-euro contract to build a line of the Doha metro in Qatar.
Fresnillo, the world’s biggest producer of silver, slid 3.3 percent to 1,034 pence. Polymetal International Plc, a Russian gold and silver producer, fell 2.6 percent to 617 pence. Lonmin Plc, the third-largest platinum mining company, lost 3.7 percent to 264.1 pence.
FirstGroup Plc (FGP) slumped 30 percent to 155.6 pence, the biggest drop since at least 1995, after the operator of buses and trains said it will not pay a dividend. The company also announced a 615 million-pound ($936 million) capital increase through a rights offer.
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