European Stocks Advance as Alcoa Boosts Earnings OptimismTom Stoukas
European stocks rose to the highest level in almost a month as Alcoa Inc. started the U.S. earnings-reporting season with results that beat analysts’ estimates.
Mining companies led gains after Alcoa said China will lead an increase in global aluminum demand. Electricite de France SA jumped the most since October 2008 after a report that the utility will increase its tariff. LVMH Moet Hennessy Louis Vuitton SA added 2.1 percent after it agreed to acquire 80 percent of Italian clothier Loro Piana SpA.
The Stoxx Europe 600 Index gained 0.8 percent to 294.58, its highest level since June 10. The equity benchmark has rallied 6.9 percent since its 2013 low on June 24 as the European Central Bank and the Bank of England pledged to keep interest rates low for the foreseeable future.
“Earnings will increasingly come into focus this week,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Pension A/S in Copenhagen, wrote in a message. “But it’s still very much about monetary policy shaping markets. There seems to be an element of realizing that Fed tapering is not a disaster for equities as opposed to bonds, at least in the long run, because it’s ultimately a sign of a more resilient economy.”
Alcoa, the first member of the Dow Jones Industrial Average to report quarterly results, said profit excluding some expenses was 7 cents a share. That beat the 6-cent average of 15 estimates compiled by Bloomberg. Sales fell to $5.85 billion, still surpassing the $5.79 billion average projection.
National benchmark indexes advanced in 12 of the 18 western-European markets today. The U.K.’s FTSE 100 added 1 percent, Germany’s DAX climbed 1.1 percent, and France’s CAC 40 gained 0.5 percent.
A gauge of mining companies rose 2.4 percent, for the best performance among the 19 industry groups on the Stoxx 600. Global aluminum demand will increase 7 percent this year, led by an 11 percent growth in China, Alcoa said.
BHP Billiton Ltd. and Rio Tinto Group climbed 2.4 percent to 1,729.5 pence and 2.5 percent to 2,736.5 pence, respectively. Polymetal International Plc, which operates gold and silver mines in Russia and a gold-and-copper mine in Kazakhstan, advanced 6.7 percent to 506 pence. Anglo American Plc gained 3 percent to 1,282 pence.
EDF rallied 9.3 percent to 19.40 euros. France has authorized the utility to raise its power prices for households by 5 percent next month and by another 5 percent in August 2014, Le Parisien reported. The newspaper cited a statement from Ecology and Energy Minister Philippe Martin. Separately, UBS AG upgraded the stock to neutral.
LVMH advanced 2.1 percent to 131.40 euros. The company agreed to pay 2 billion euros ($2.55 billion) for 80 percent of Loro Piana. The family owners of the maker of $1,385 cashmere sweaters will retain a 20 percent stake in the business, Paris-based LVMH said.
Royal Bank of Scotland Group Plc rose 5.4 percent to 304.4 pence, for its first back-to-back gains in almost a month. Goldman Sachs Group Inc. raised its rating on the state-owned lender to buy from neutral, saying a split of RBS would allow the bank to focus on profitable operations while accelerating a privatization of the bank.
Hikma Pharmaceuticals Plc rose 2.2 percent to 1,073 pence. UBS upgraded its recommendation for the stock to neutral from sell. The drugmaker jumped 5.6 percent yesterday to its highest price since its initial public offering in 2005 after raising its estimate for revenue growth this year to 17 percent, from a previous forecast of 13 percent.
Osram Licht AG, the lighting company spun off by Siemens AG, surged 17 percent to 27.84 euros on its second day of trading in Frankfurt. UBS rated the stock buy, while HSBC Holdings Plc gave it an overweight rating.
Henderson Group Plc advanced 7.5 percent to 173.1 pence, its biggest gain since November 2011. The U.K. fund manager forecast underlying profit of about 100 million pounds ($148 million) for the first half of the year.
Aveva Group Plc gained 14 percent to 2,578 pence, its highest price since it sold shares to the public in 1996. The computer software maker said it has seen a “good start” to the financial year, with demand growth steady in Europe, Africa and Asia and activity picking up in North America.
“There are early signs that business activity is beginning to pick up in Brazil, where we have won strategically important offshore and onshore contracts during the first quarter of the financial year,” Aveva said.