European Stocks Advance as Euro-Area Confidence Increases
European stocks advanced, extending a weekly gain, as a measure of euro-area economic confidence rose in March more than forecast and Italian banks rallied following a government-debt sale.
Intesa Sanpaolo SpA added 3.5 percent as it forecast dividend payouts of about 10 billion euros ($13.7 billion) through 2017. Pirelli & C. SpA increased 3.2 percent after reporting 2013 earnings that surpassed analysts’ predictions. Resolution Ltd. and Aviva Plc led insurers lower after the U.K. financial regulator said it plans to conduct an inquiry into possibly unfair charges levied on life-insurance policies.
The Stoxx Europe 600 Index added 0.7 percent to 333.76 at the close of trading, extending this week’s advance to 1.8 percent. The benchmark gauge has still dropped 1.3 percent so far in March amid tension between Russia and the West over Ukraine’s Crimea region.
“The confidence data show good numbers indeed,” said Espen Furnes, who helps oversee $75 billion at Storebrand Asset Management in Oslo. “The continuing recovery in the euro zone is key for the stock market throughout 2014. I’m pretty confident about the pace and power of the rebound. Based on this, it’s hard to be anything but bullish.”
A gauge of economic confidence in the euro area rose to 102.4 in March from 101.2 a month earlier, beating analyst forecasts for a rise to 101.4. Separate data showed a measure of the region’s industrial confidence stood at minus 3.3 this month, compared with estimates for minus 3.5. In the U.S., consumer spending rose by the most in three months in February, as incomes increased.
National benchmark indexes rose in all of the western European markets except Iceland. The U.K.’s FTSE 100 gained 0.4 percent and France’s CAC 40 climbed 0.7 percent, while Germany’s DAX jumped 1.4 percent.
Intesa Sanpaolo rallied 3.5 percent to 2.40 euros. Italy’s second-biggest bank forecast dividend payouts of 1 billion euros this year and 2 billion euros next. The lender also said its fourth-quarter loss widened to 5.19 billion euros from 83 million euros a year earlier, as it wrote down goodwill and set aside more money for bad loans. Analysts on average had estimated a profit of 210 million euros.
Italian lenders advanced after borrowing costs fell at a sale of five- and 10-year government debt. Bank of Italy Governor Ignazio Visco said he sees encouraging signs of an economic revival. Banco Popolare SC jumped 7 percent to 18 euros and Banca Monte dei Paschi Siena SpA climbed 4.4 percent to 25.3 euro cents.
Pirelli climbed 3.2 percent to 11.58 euros after reporting 2013 earnings before interest and taxes of 791 million euros, beating the 789 million-euro average analyst projection. The Italian tiremaker also cut its forecast for 2014 revenue to about 6.2 billion euros from 6.6 billion euros, citing the effect of currency swings.
Deutsche Wohnen AG advanced 1.1 percent to 15.54 euros after saying funds from operations excluding divestments, a measure of a property company’s ability to generate cash, climbed 68 percent from a year earlier to 114.5 million euros. Germany’s second-biggest residential landlord by market value had forecast 110 million euros. FFO in 2014 will be at least 210 million euros, the company said in a statement.
Aurubis AG, the world’s second-biggest producer of refined copper, gained 2.7 percent to 39.13 euros and Glencore Xstrata Plc, the third biggest, added 2 percent to 313.3 pence. A gauge of mining stocks was among the best performers of the 19 industry groups in the Stoxx 600 as copper prices climbed, heading for the biggest weekly gain since September.
Resolution sank 7.1 percent to 296.3 pence and Aviva lost 2.8 percent to 470.2 pence. Legal & General Group Plc dropped 3.5 percent to 205 pence. A gauge of insurers posted the worst performance among Stoxx 600 industry groups.
The U.K.’s financial regulator said it will investigate insurance policies dating back to the 1970s. The Financial Conduct Authority will publish a plan of its priorities for the year on March 31 that will include an examination of treatment of long-standing customers in the life-insurance market, a spokeswoman for the London-based regulator said in a statement.
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