European Stocks Advance as BP Rally Offsets UBS Plunge
BP advanced 5.6 percent after increasing its dividend. Nokia Oyj (NOK1V) rose the most on the Stoxx Europe 600 Index after forecasting rising profit margins at its network unit. UBS AG dropped the most in more than two years after saying it probably won’t reach its profitability goal in 2015 after the Swiss regulator demanded the country’s largest lender hold more capital for risks related to litigation.
The Stoxx 600 added 0.4 percent to 320.77 at the close of trading. The gauge fell 0.2 percent yesterday, snapping a three-week rally, as U.S. factory production and home sales missed forecasts. It has still soared 15 percent in 2013, closing at a five-year high on Oct. 22, as central banks around the world pledged to leave interest rates low for a prolonged period.
“The Fed meeting is in focus and it is likely that the Committee will view weak U.S. economic reports as not supportive of tapering in 2013,” said Lorne Baring, who oversees about $500 million as managing director of B Capital SA in Geneva. “The overreaction to the mention of tapering is now over. Underlying sentiment is still positive and I think European stocks still offer more intrinsic value than U.S. equities.”
The Federal Open Market Committee started a two-day meeting today to consider when to begin trimming the $85 billion-a-month of bond purchases that have buoyed global markets. Policy makers will hold off paring stimulus measures until the March 18-19 meeting, a Bloomberg survey showed this month.
Retail sales in the U.S. outside of auto dealers climbed in September. The 0.4 percent gain in purchases excluding vehicles followed a 0.1 percent increase in August and matched the median forecast of economists surveyed by Bloomberg, Commerce Department figures showed today in Washington.
A separate report showed that confidence among U.S. consumers declined in October by the most since August 2011. The Conference Board’s index fell to 71.2 in October from a revised 80.2 the month prior, the New York-based private research group said today. The median forecast in a Bloomberg survey of economists called for a reading of 75.
BP (BP/) added 5.6 percent to 477.5 pence, its biggest gain since January 2011. Europe’s third-largest oil company raised its dividend by 5.6 percent to 9.5 cents a share. Profit adjusted for one-time items and inventory changes dropped to $3.7 billion from $5 billion a year earlier, beating the $3.4 billion average estimate of 13 analysts surveyed by Bloomberg.
A gauge of European oil and gas companies posted the best performance of the 19 industry groups in the Stoxx 600, gaining 1.9 percent to a nine-month high. Saipem SpA rallied 4.7 percent to 17.04 euros and Fugro NV added 2 percent to 46.48 euros.
Nokia Oyj jumped 7 percent to 5.35 euros. The Espoo, Finland-based company forecast rising profit margins at the network operation that will become its main business after the mobile-phone division it is sold to Microsoft Corp. (MSFT) Operating profit, excluding some costs, will be as high as 16 percent of sales at the unit this quarter, Nokia said today.
Nokia also reported a net loss in the third quarter that narrowed to 91 million euros from 959 million euros a year earlier. Analysts had projected a 171.5 million-euro loss.
OC Oerlikon Corp. (OERL) climbed 1.6 percent to 12.65 Swiss francs. The maker of textile machinery reported third-quarter earnings before interest and taxes of 88 million francs ($98 million), beating the 86 million francs analysts had forecast.
UBS slid 7.7 percent to 17.70 francs. The bank’s target of reaching 15 percent return on equity in 2015 will be delayed by at least a year unless the regulator removes its capital demand, the Zurich-based lender said in a statement. UBS also reported third-quarter net income of 577 million francs, beating the average analyst estimate that called for 561 million francs.
“It’s disappointing that the capital ratio will decline,” Andreas Venditti, an analyst at Zuercher Kantonalbank AG in Zurich, wrote in a note to clients today. “The market expected a significant increase. This should disappoint certain hopes in the market for a high dividend next spring.”
Michelin & Cie. (ML), Europe’s largest tiremaker, slipped 3.7 percent to 76.78 euros. Sales in the third quarter fell 5.8 percent to 5.12 billion euros from 5.44 billion euros a year earlier. That missed the 5.33 billion-euro average of five analyst estimates compiled by Bloomberg.
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