European Stocks Gain for Second Week on China Data, Syria
Kabel Deutschland AG rose 7.1 percent after its shareholders approved a bid by Vodafone Group Plc. Nokia Oyj surged 15 percent, gaining every day of the week, after brokerages including Bank of America Corp. and Berenberg Bank upgraded the shares. Randgold Resources Ltd. and Fresnillo Plc each dropped at least 5 percent as gold and silver prices fell.
The Stoxx Europe 600 Index advanced 1.8 percent to 311.46 this week, reaching a five-year high on a daily closing basis. It has climbed 11 percent so far this year as the euro area emerged from recession and as central banks pledged to maintain stimulus measures to support the global economy.
“European stocks have underperformed U.S. equities so far this year, and with the euro zone out of recession, we’re now in a catch-up phase,” said Espen Furnes, who helps oversee $75 billion as a fund manager at Storebrand Asset Management in Oslo. “The upward move over the last two weeks is warranted and has a solid fundamental basis. For the time being, the Syria situation seems to be under control, and financial markets are responding positively to a dampened conflict level.”
The Standard & Poor’s 500 Index has rallied 18 percent so far this year. The Stoxx 600, while lagging U.S. equities in year-to-date returns, has beaten the S&P 500 this quarter. The European gauge has rallied 9.3 percent since the end of June, compared with a 5.1 percent increase in the U.S. benchmark.
In China, a report on Sept. 10 from the National Bureau of Statistics showed industrial output rose 10.4 percent in August from a year earlier, exceeding the 9.9 percent median estimate of economists surveyed by Bloomberg. Another release the same day showed retail sales in the world’s second-biggest economy gained 13.4 percent, compared with a projection for a 13.3 percent increase. China’s August exports increased more than forecast, separate data showed.
U.S. President Barack Obama said in a Sept. 10 address from Washington that he will pursue a proposal by Russia to have Syria surrender chemical weapons to international authorities. He asked Congress to postpone a vote on military action against the regime of Syrian President Bashar al-Assad, which he intended as a response to a chemical attack last month that the U.S. says killed more than 1,400 people.
Federal Reserve officials meet next week to decide whether to start reducing the central bank’s $85 billion monthly bond purchases. The Fed will taper asset purchases to $75 billion at the Sept. 17-18 meeting, according to the median forecast of economists in a Bloomberg survey.
Kabel Deutschland climbed 7.1 percent, the biggest weekly gain in three months. Vodafone on Sept. 12 said its offer of 7.7 billion euros ($10.2 billion) won the backing of at least 75 percent of the German broadcaster’s shareholders, the minimum threshold for the deal to go through.
Nokia, the Finnish company which last week agreed to sell its mobile-phone business to Microsoft Corp., rallied 15 percent. It has surged 62 percent this month. Bank of America’s Merrill Lynch unit raised its rating on the shares to buy from neutral, while Berenberg upgraded the stock to buy from sell. RBC Capital Markets raised its recommendation on Nokia to outperform, similar to buy, from sector perform.
A gauge of technology companies climbed 3.6 percent for the second-best performance on the Stoxx 600. Alcatel-Lucent climbed 8.9 percent and Ericsson AB gained 3 percent.
ARM Holdings Plc, which designs chips for Apple Inc.’s iPhones, gained 8.9 percent after the U.S. company unveiled two new models of the device. The introductions will benefit ARM because Apple will use ARM’s more advanced technology earlier than expected, Deutsche Bank AG analysts Johannes Schaller and Kai Korschelt wrote in a note.
Home Retail Group Plc advanced 12 percent after saying that same-store sales at its Homebase business jumped 11 percent in the 13 weeks ended Aug. 31. That beat the 3 percent median of analyst estimates compiled by Bloomberg. Sales at its Argos unit rose 2.7 percent, also exceeding the median forecast.
K+S AG, a German potash producer, jumped 20 percent. Forbes magazine’s Russian edition named three possible bidders for billionaire Suleiman Kerimov’s 22 percent stake in OAO Uralkali, the world’s biggest producer of the fertilizer ingredient. K+S tumbled 24 percent on July 30 as Uralkali ended a deal that had set prices for more than 40 percent of global supplies.
Fresnillo, a producer of gold and silver in Mexico, lost 5.2 percent as prices of both precious metals tumbled this week. Randgold Resources slid 9.7 percent and Polymetal International Plc declined 7.7 percent.
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