Europe Stocks Are Little Changed After Confidence Report
European stocks were little changed, with the Stoxx Europe 600 Index posting its biggest weekly gain in five weeks, as consumer confidence increased more than forecast, while derivatives contracts expired.
Rio Tinto Group rose 1.6 percent as copper rebounded. Commerzbank AG climbed 2.5 percent as Morgan Stanley upgraded its rating on the German lender. Havas SA lost 1.8 percent after posting 2013 profit that fell short of analysts’ estimates. Remy Cointreau SA retreated the most since November as UBS predicted China’s anti-extravagance measures will continue to cut into the cognac-maker’s profit.
The Stoxx 600 gained 0.1 percent to 327.91 at the close of trading. The index has advanced 1.8 percent this week, paring its loss this year to 0.1 percent, as President Vladimir Putin said he wasn’t seeking to split up Ukraine after Crimea voted to join Russia.
“The market has proven to be very resilient and we think it will trade within this range in the next few months,” Supriya Menon, who helps oversee about $152 billion as a strategist at Pictet Asset Management, said by phone from London. “We did turn more cautious on Europe at the end of February because so much is already priced into valuations. You have to be much more tactical now with your entry points to take advantage of any dips in the market.”
The VStoxx Index, which measures expected Euro Stoxx 50 Index volatility using options prices, fell 26 percent this week, its largest weekly drop since July 2011.
Volumes were greater as futures and options contracts expired in a process known as witching. The number of shares trading hands in Stoxx 600-listed companies was 44 percent higher than the average of the past 30 days, data compiled by Bloomberg showed.
The European equity gauge is trading at 14.6 times the projected earnings of its members, down from 15.7 times at the end of 2013, which was the highest valuation in four years.
Consumer confidence in the euro area improved this month more than projected, according to data from the European Commission. An advance reading showed an index of household confidence increased in March to minus 9.3 from minus 12.7 in February. The median economist estimate compiled by Bloomberg had predicted a reading of minus 12.3.
A measure of commodity producers climbed 1.1 percent, for the largest rally among 19 industry groups on the Stoxx 600, as base metals advanced on the London Metal Exchange. Rio Tinto added 1.6 percent to 3,207 pence, while Anglo American Plc increased 2 percent to 1,439.5 pence. Fresnillo Plc rose 2.1 percent to 885 pence as gold and silver halted a four-day losing streak.
Commerzbank climbed 2.5 percent to 13.33 euros. Morgan Stanley raised Germany’s second-largest lender to overweight, similar to buy, from equal weight. Analysts Hubert Lam and Francesca Tondi said non-core assets are undervalued and the likelihood of another capital increase has decreased. Separately, Commerzbank said today that it has already attained its capital requirement target for 2014.
Havas declined 1.8 percent to 5.70 euros. The French advertising agency partly-owned by billionaire Vincent Bollore said net income rose to 128 million euros ($177 million). That missed the 133 million-euro average analyst estimate compiled by Bloomberg.
Remy fell 3.9 percent to 59.07 euros. The company will find it harder to recover from a slump in Chinese sales because it lacks the global distribution channels of its rivals, according to UBS. Cognac sales may drop as much as 25 percent in the fourth quarter, UBS said.
Vivendi SA lost 1.4 percent to 19.67 euros. Altice SA, which is in talks to buy Vivendi’s SFR phone unit, has no plan to revise its bid even after Bouygues SA sweetened its rival offer yesterday, according to a person familiar with the matter. Altice can change its bid during the three-week exclusivity period ending April 4, the person said.
Burberry Group Plc, the luxury British clothing retailer known for its trench coats, lost 2.1 percent to 1,390 pence. Bank of America Corp. cut its rating on the company to neutral from buy, saying the strength of the pound and the euro may cut into profit.
Crest Nicholson Holdings Plc (CRST) declined 3.3 percent to 386.9 pence. Deutsche Bank AG is selling as many as 16.5 million shares, a 6.6 percent stake, in the U.K. housebuilder, according to a term sheet obtained by Bloomberg News. The German lender is its largest publicly disclosed shareholder, holding a 10 percent stake before the sale, data compiled by Bloomberg show.
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