European Stocks Extend Six-Year High Amid Draghi Optimism
European stocks rose, extending their highest level in more than six years, amid optimism that measures announced by the European Central Bank last week to increase inflation will help propel equities higher.
Gemalto NV (GTO) rose 2 percent after saying China Telecom Corp. chose it to supply software for chips that can be used for contactless payments by mobile phone. Bank of Ireland Plc dropped 3.2 percent after U.S. billionaire Wilbur Ross put on sale his remaining shares in the country’s largest lender by assets. Booker Group (BOK) Plc slid 2.2 percent after Goldman Sachs Group Inc. removed the stock from its conviction-buy list.
The Stoxx Europe 600 Index gained 0.3 percent to 349.71 at the close of trading, its highest level since January 2008. The benchmark has rallied 10 percent from this year’s low as ECB President Mario Draghi unveiled a package of rate cuts and cheap loans for banks in an attempt to end the euro zone’s persistent low inflation.
“Draghi’s monetary policy indicates that a weaker euro is possible, which will boost exports and improve competitiveness for European companies,” Lorne Baring, who helps oversee about $500 million as managing director at B Capital SA in Geneva, said by telephone. “We would advise investors to remain relatively bullish on European stocks. We’re not looking to add exposure, but we’re happy to hold.”
In the U.K., a report from the Office for National Statistics showed that industrial output in Europe’s third-largest economy climbed 0.4 percent in April. Economists had predicted that the measure would rise by that amount. Industrial production gained a revised 0.1 percent in March.
A release from France’s national statistics institute showed that industrial output rose 0.3 percent in April. That matched the median estimate of economists surveyed by Bloomberg News. Output fell a revised 0.4 percent in March.
National benchmark indexes rose in 11 of the 18 western-European markets today. Germany’s DAX added 0.2 percent, while France’s CAC 40 advanced 0.1 percent. The U.K.’s FTSE 100 lost less than 0.1 percent.
Gemalto climbed 2 percent to 83.58 euros after saying China Telecom’s SIM cards will use its software. The new chips will enable mobile phones to be used for contactless payments using near-field communication technology.
A gauge of health-care companies posted the second-best performance of the 19 industry groups in the Stoxx 600 today. Novo Nordisk A/S (NOVOB) gained 3.3 percent to 244.30 kroner and Roche Holding AG (ROG) advanced 2 percent to 272.50 Swiss francs.
Bank of Ireland
Bank of Ireland (BKIR) slipped 3.2 percent to 27.5 euro cents. WL Ross & Co. offered 1.8 billion shares at 26.5 cents apiece, a person familiar with the matter said. That was 6.7 percent less than yesterday’s closing price of 28.4 cents. Ross and four other investors paid 1.1 billion euros ($1.5 billion) at 10 cents a share for a 34.9 stake in Bank of Ireland in 2011. That investment helped the lender avoid state control.
Booker Group retreated 2.2 percent to 142.7 pence after Goldman Sachs removed the British food wholesaler from its conviction-buy list, saying it expects sales to decline at the company’s Makro division this year and next.
Orange SA (ORA), which has held talks with Bouygues SA (EN) about buying its telecommunications business, dropped 1.4 percent to 12.63 euros. Iliad SA made an informal offer to buy Bouygues Telecom for 4 billion euros to 5 billion euros within the last few weeks, people familiar with the matter said late yesterday. Bouygues wants 7 billion euros to 8 billion euros, leaving the negotiations at a standstill, the people said. Bouygues decreased 0.4 percent to 34.17 euros.
Lonmin Plc declined 3.2 percent to 242.9 pence. Talks brokered by the South African government to end a 20-week strike by workers at the country’s platinum mines ended without an agreement, Lonmin said late yesterday in a joint statement with two other producers. Anglo American Plc, which owns Anglo American Platinum Ltd., dropped 1.3 percent to 1,452 pence.
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