European Stocks Are Little Changed; TUI Travel GainsJonathan Morgan and Sarah Jones
European stocks were little changed, erasing an earlier retreat for the region’s benchmark Stoxx Europe 600 Index, as U.S. industrial production climbed and Goldman Sachs Group Inc.’s earnings topped estimates.
TUI Travel Plc gained 3.9 percent after Europe’s largest tour operator said it received an approach from its German majority owner. Anglo American Plc dropped 3.1 percent as the African National Congress said South Africa’s government should withdraw the company’s platinum licenses. Societe Generale SA lost 2.8 percent as CA Cheuvreux downgraded the French lender.
The Stoxx 600 rose less than 0.1 percent to 286.03 at the close of trading, after earlier falling as much as 0.4 percent. The gauge has advanced 2.3 percent since the start of the year after U.S. lawmakers agreed on a budget, avoiding tax increases and spending cuts.
“Things have improved, compared to last year the world looks better,” Sebastian Paris-Horvitz, chief market strategist at HSBC Private Bank, told Francine Lacqua in an interview on Bloomberg Television today. “I do believe in the rotation towards equities, it looks better value for the future and is the reason we have been advocating the move toward riskier assets.”
The volume of shares changing hands in companies listed on Europe’s Stoxx 600 was 20 percent higher than the 30-day average today, according to data compiled by Bloomberg.
Economic data today showed U.S. industrial production climbed 0.3 percent in December, for a second month of gains, as demand picked up for capital equipment. That matched the median forecast in a Bloomberg survey, after a revised 1 percent November gain, the Federal Reserve report showed.
Confidence among U.S. homebuilders held at the highest level in more than six years in January, adding to evidence that residential real estate will help spur economic growth. The National Association of Home Builders/Wells Fargo index remained at 47.
Goldman Sachs, the fifth-biggest U.S. bank, rallied in New York trading after fourth-quarter net income almost tripled. Earnings for common shareholders, which include the cost of preferred stock dividends, rose to $5.60 a share, exceeding the $3.66 average estimate of 26 analysts surveyed by Bloomberg.
Of the 39 companies in the Standard & Poor’s 500 Index to have released fourth-quarter earnings, 74 percent have exceeded analysts’ profit projections, according to Bloomberg data.
“We would expect some modest consolidation in the next month or two as investors digest earnings and deal with the fiscal disagreement in the U.S.,” said Terry Ewing, a fund manager at Ignis Asset Management Ltd. in Glasgow, Scotland, which oversees about $110 billion. “There has already been a marked reduction in investors’ expectations going into the fourth quarter, which is a good set up.”
Stocks fell earlier as the World Bank cut its global growth forecast for this year to 2.4 percent as austerity measures, high unemployment and low business confidence weigh on economies in developed nations. That’s down from a June forecast of 3 percent, after growth of 2.3 percent in 2012.
TUI Travel rallied 3.9 percent to 292.5 pence after the company said its in early stage talks with TUI AG that “may or may not result in a combination of the two companies.” Shares of TUI AG surged 8.8 percent to 8.05 euros in Frankfurt.
Anglo American, the world’s largest platinum producer, dropped 3.1 percent to 1,901 pence after the ANC called on the South African government to withdraw mining licenses from Anglo’s Amplats unit.
The business, also known as Anglo American Platinum Ltd., said yesterday that it will idle four shafts in South Africa, cutting production of the precious metal by 400,000 ounces a year and firing as many as 14,000 workers.
Lonmin Plc, the third-largest platinum producer, tumbled 5.7 percent to 326.3 pence.
KappAhl AB jumped 17 percent to 5.10 kronor after Sweden’s second-biggest publicly traded clothing retailer reported first-quarter net profit of 115 million kronor ($17.7 million), exceeding analyst estimates of 70.4 million kronor. Sales also topped forecasts.
Societe Generale slid 2.8 percent to 32.54 euros, a second day of losses. Cheuvreux downgraded the French bank to underperform, the equivalent of sell, from outperform.