European Stocks Jump Most in Eight Months on EarningsSarah Jones
European stocks jumped the most in eight months as ARM Holdings Plc and Cie. Financiere Richemont SA reported results that topped estimates and speculation grew that the region’s central bank will cut interest rates.
ARM, the designer of chips for Apple Inc.’s iPhone, soared to a 13-year high on better-than-forecast sales. Richemont surged the most since 2008 as the maker of Cartier jewelry said net income climbed. Prudential Plc led a gauge of insurers higher. Royal Imtech NV sank 5.6 percent after increasing a writedown on projects in Germany.
The Stoxx Europe 600 Index soared 2.4 percent to 292.63 at the close of trading, the biggest jump since Aug. 3. The benchmark measure has still retreated 2 percent from this year’s high on March 14 as economic data from the U.S. to China missed forecasts and Cyprus reignited concern about the euro area’s debt crisis. The gauge has climbed 4.6 percent this year.
“We are reasonably positive and look for another 7 to 10 percent on equities worldwide this year,” Alan Higgins, who oversees about $44 billion as chief investment officer at Coutts & Co. in London, told Francine Lacqua on Bloomberg Television. “Provided the weaker growth doesn’t result in an earnings crash, the market can come to terms with it.”
Stocks extended gains even after a report showed euro-area services and manufacturing output shrank for a 15th month in April. The reading of 46.5 in the Markit Economics purchasing-managers index boosted speculation the European Central Bank will trim interest rates when it meets next week, according to JPMorgan Chase & Co. Numbers below 50 indicate contraction.
“Today’s PMI makes an ECB rate cut more likely,” Greg Fuzesi, a London-based economist at JPMorgan, wrote in a report. “Our current call is for June, but there is an increased chance that a 25 basis-point cut of the main rate could be delivered next week.”
A separate report showed Chinese manufacturing expanded at a slower pace than forecasts this month. The preliminary PMI for April released by HSBC Holdings Plc and Markit stood at 50.5, compared with a final 51.6 in March. That was below the median economist estimate of 51.5 in a Bloomberg survey.
National benchmark indexes climbed in all 18 western European markets, except Greece. The U.K.’s FTSE 100 increased 2 percent and Germany’s DAX rallied 2.4 percent. France’s CAC 40 jumped 3.6 percent for the biggest gain since August.
The yield on Italian 10-year government bonds fell below 4 percent for the first time in almost 2 1/2 years today, while Spanish and Portuguese rates dropped to the lower since 2010.
The volume of shares changing hands in Stoxx 600-listed companies today was 18 percent higher than the 30-day average, according to data compiled by Bloomberg.
ARM surged 12 percent to 972 pence, the highest price since March 2000. Revenue in the quarter ending in March rose 29 percent to 170.3 million pounds ($260 million) amid demand for it graphics and processing technology, the company said. Analysts had predicted 160 million pounds, according to the average of a Bloomberg survey.
Richemont rallied 8.3 percent to 73.80 Swiss francs, the biggest gain since December 2008. The Swiss company said full-year net income climbed about 30 percent as the dollar’s strength against the euro boosted sales growth. Analysts had expected a 25 percent gain in profit, according to the average of 17 estimates compiled by Bloomberg.
All 19 industry groups advanced in the Stoxx 600, with a measure of insurance companies jumping 3.7 percent. Prudential, the U.K.’s largest insurer by market value, climbed 6.2 percent to 1,096 pence. Axa SA rose 4.8 percent to 13.65 euros in Paris.
STMicroelectronics NV, a maker of semiconductors, rallied 9.2 percent to 6.13 euros even after reporting a first-quarter net loss. Chief Executive Officer Carlo Bozotti told analysts on a conference call he expects “significant growth” in the second half of 2013, driven by new products and improved demand.
Aixtron SE, a German maker of semiconductor- and lighting-production equipment, climbed 10 percent to 10.66 euros, rising for the first time in eight days. The shares advanced as U.S. peer Veeco Instruments Inc. forecast “meaningfully higher” bookings in the second quarter.
Telecom Italia SpA increased 6.3 percent to 61.4 euro cents. The Italian phone company that’s exploring a separation of its fixed-line assets is considering a sale of an initial 30 percent stake in the new company to state lender Cassa Depositi e Prestiti, two people familiar with the matter said.
Imtech tumbled 5.6 percent to 8.39 euros after the Dutch provider of stadium infrastructure for the London Olympics increased a writedown on projects in Germany by 70 million euros ($91 million) to about 220 million euros. The company is investigating German and Polish projects and expects to present the results in the summer, Chief Executive Officer Gerard van de Aast said on a conference call today.