European Stocks Advance as U.S. Manufacturing Accelerates
European stocks advanced, after the Stoxx Europe 600 Index declined last month, as a report showed manufacturing in the U.S. expanded at a faster pace in March.
Alstom SA jumped the most since January 2012 after agreeing to sell a unit to Triton. Metso Oyj soared 19 percent after Weir Group Plc proposed a merger with the Finnish maker of rock crushers. ICAP (IAP) Plc rose 2.6 percent after the world’s largest broker of transactions between banks forecast full-year profit will meet analysts’ estimates, even as sales from its broking unit continued to decline.
The Stoxx 600 gained 0.6 percent to 336.35 at the close of trading. The benchmark gauge fell 1.1 percent in March amid tension between Russia and the West over Ukraine’s Crimea region. The volume of shares changing hands in Stoxx 600 companies today was 15 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
“There’s optimism in today’s trading,” said Ramiro Loureiro, a Lisbon-based market analyst at Banco Comercial Portugues SA’s Millennium unit. “U.S. data like today’s ISM manufacturing report may well define the mood of the markets after the Fed said it will probably begin to link its monetary policy to more qualitative indicators. The lower European unemployment has also motivated investors today.”
American manufacturing growth accelerated in March, data showed today. The Institute for Supply Management’s index rose to 53.7 from 53.2 in February. That missed the median economist estimate of 54.0. Readings above 50 signal expansion.
Unemployment in the euro-area stood at 11.9 percent in February, unchanged from a revised 11.9 percent the previous month, according to a report from Eurostat in Luxembourg. Analysts had forecast a 12 percent rate for the month.
Growth in euro-area manufacturing activity stayed close to the highest level in almost three years in March, according to data released today. An index based on a survey of purchasing managers slipped to 53.0 from 53.2 February, matching an initial estimate released last week, London-based Markit Economics Ltd. said. The index has stayed above 50 since July.
In China, a purchasing managers’ index by HSBC Holdings Plc and Markit Economics fell to 48 in March, the lowest reading since July, from 48.5 in February. Another PMI from the government, with a larger sample size, stood at 50.3 from 50.2 the previous month. China is the world’s biggest commodity consumer. Rio Tinto Group, the world’s second-largest mining company, rose 1.1 percent to 3,375 pence.
BHP Billiton Ltd. added 2.1 percent to 1,882 pence after saying that it may simplify its operations to focus on iron ore, copper, coal and petroleum. The world’s biggest mining company is considering options including spinning off aluminum, nickel and bauxite assets in a A$20 billion ($18.5 billion) transaction, the Australian Financial Review reported.
Alstom advanced 8.1 percent to 21.43 euros after the French maker of trains and power-generation equipment agreed to sell an auxiliary components unit to Triton for an enterprise value of about 730 million euros ($1 billion).
Metso jumped 19 percent to 28.34 euros. Weir said in a statement that its indicative all-share merger proposal offers significant efficiencies and synergies, without giving further details. Metso confirmed separately that it’s considering an unsolicited approach from the British pressure-pump maker. The Times reported Weir may pay as much as 30 euros a share for the Finnish business. Weir declined 0.7 percent to 2,518 pence.
ICAP rose 2.6 percent to 387.5 pence. The company said estimates for its full-year profit range between 266 million pounds ($443 million) and 280 million pounds, according to a poll of 11 analysts by the company. It reports full-year results on May 14. Revenue at ICAP’s global broking division fell 14 percent in February and March compared to the same period last year, the London-based firm said in a statement.
Aberdeen Asset Management Plc (ADN) advanced 6.7 percent to 416.5 pence. Europe’s largest publicly traded money manager announced 1.2 billion pounds in new funds for March and more plans to cut costs. It also said funds under management after its acquisition of Scottish Widows Investment Partnership totaled 324.5 billion pounds on Feb. 28 and the purchase will add to underlying earnings per share in the first full financial year after completion.
Babcock International Group Plc rose 3 percent to 1,387 pence, posting its biggest two-day gain since May. The engineering and facilities-management provider was named the preferred bidder for a 21-year contract to manage London Fire Brigade’s vehicle fleet.
Panmure Gordon & Co. raised its rating on Babcock to buy from hold, saying it is in a strong position to beat earnings forecasts due to improved margins and yesterday’s announcement that a unit’s joint venture was named a preferred bidder to buy nuclear-site licencing companies.
Cap Gemini SA (CAP) dropped 2.4 percent to 53.66 euros. Bank of America Corp. cut the French competitor to International Business Machines Corp. to underperform from neutral, meaning investors should sell the shares. The bank cited the stock’s high valuation and signs of pricing pressure. Cap Gemini trades at 15.1 times estimated earnings, compared with an average 14.3 in the past five years, according to data compiled by Bloomberg.
Osram Licht AG slipped 0.8 percent to 46.70 euros, after earlier losing as much as 5 percent. The lighting manufacturer said traditional-lamp sales continued to decline in the first two months of the recent quarter.
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