European Stocks Advance to 23-Month High; Philips GainsTom Stoukas and Sarah Jones
European stocks rose to the highest level in more than 23 months as companies reported earnings and a report showed house prices in 20 U.S. cities increased.
Royal Philips Electronics NV climbed 2.3 percent after the world’s largest lighting manufacturer reported fourth-quarter results that topped analyst estimates. William Hill Plc gained 2.1 percent after the bookmaker reporter a jump sales. Anglo American Plc led mining companies higher, rallying 3 percent.
The Stoxx Europe 600 Index added 0.3 percent to 290.3 at the close in London, the highest level since Feb. 18, 2011. The index has climbed 3.8 percent so far this year amid optimism about company earnings and as U.S. lawmakers agreed on a compromise budget to avoid automatic fiscal-reduction measures.
“There’s a real opportunity for stock picking now,” Daniel Morris, a global strategist at JPMorgan Chase & Co. in London said on Bloomberg Television with Francine Lacqua. “Even if you do see a bit of a dip in equity markets, you can buy now. The market is somewhat inexpensive relative to history.”
Stocks advanced as the S&P/Case-Shiller index of U.S. property values increased 5.5 percent from November 2011, the biggest year-over-year gain since August 2006, a report showed in New York. The median projection of 30 economists surveyed by Bloomberg called for a 5.6 percent advance.
The Stoxx 600 earlier fell as much as 0.2 percent as U.S. consumer confidence declined more than forecast and as investors await the outcome of the U.S. Federal Open Market Committee two-day meeting that started today. The central bank is expected to renew its commitment to asset buying according to economists surveyed Jan. 24-25.
The volume of shares changing hands in Stoxx 600 companies today was 4 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
National benchmark indexes climbed in 12 of the 18 western European markets. The U.K.’s FTSE 100 increased 0.7 percent, France’s CAC 40 gained 0.1 percent and Germany’s DAX advanced 0.2 percent.
Philips gained 2.3 percent to 22.43 euros after the world’s largest lighting manufacturer reported a 50 percent increase in fourth-quarter earnings before interest, taxes, amortization and one-time items to 875 million euros. The estimate of analysts in a Bloomberg survey was for 866 million euros. Sales gained 6.7 percent.
William Hill added 2.1 percent to 374 pence after the U.K. bookmaker said full-year net revenue grew by 12 percent after experiencing a strong fourth quarter. The company, which will release final results on March 1, expects operating profit of 330 million pounds ($518 million).
Anglo American, which today said it will write down $4 billion from the value of its Minas-Rio iron-ore project in Brazil and raise spending for a sixth time, climbed 3 percent to 1,929.5 pence. JPMorgan Chase & Co. wrote in a note to clients today that the writedown came in at the lower end of expectations.
A gauge of mining companies increased 1.8 percent, the biggest advance among 19 industry groups on the Stoxx 600, as base metals advanced in London. Kazakhmys Plc rallied 2.9 percent to 766.5 pence, Rio Tinto Group added 2 percent to 3,575.5 pence. BHP Billiton Ltd., the world’s largest mining company, advanced 1.9 percent to 2,151 pence.
3i Group Plc, Britain’s oldest private-equity firm, rose 3.1 percent to 266.8 pence after saying that activist investor Edward Bramson has been buying its shares.
Software AG tumbled 17 percent to 28.90 after the German infrastructure-software provider reported fourth-quarter profit of 50.7 million euros ($68 million), missing analysts’ estimates of 52.9 million euros. Revenue in the fourth quarter came in at 276 million euros compared with estimates of 289.4 million euros.
Royal Bank of Scotland Plc lost 6 percent to 345.8 pence as U.S. authorities push for criminal charges in the probe into allegations that the lender tried to rig interest rates.
The U.S. Justice Department has extended talks to press the bank for a guilty plea in any settlement, said two people familiar with the negotiations. RBS may pay about 500 million pounds ($786 million) to U.S. and U.K. authorities to settle the claims as soon as next week, another two people with knowledge of the negotiations said.
Saipem SpA fell 3.5 percent to 30.45 euros after Bank of America Corp.’s Merrill Lynch unit placed 9.97 million shares in Europe’s largest oil contractor by market value on behalf of an institutional client, according to the terms obtained by Bloomberg News. The shares were sold at 30.65 euros apiece.
BT Group Plc fell 2.3 percent to 246.2 pence after Bank of America downgraded the U.K.’s biggest fixed-line phone company to neutral from buy saying rising costs from plans to increase sales are endangering earnings growth.