European Stocks Advance as Investors Weigh U.S. Jobs DataJonathan Morgan
European stocks advanced for a fifth day, extending a nine-week high, as company earnings beat estimates and investors studied U.S. jobs data for indications of when the Federal Reserve will start to pare stimulus.
Axa SA rose to a three-year high as property and casualty earnings boosted first-half operating profit at the insurer. Man Group Plc jumped 9.5 percent after revenue increased. International Consolidated Airlines Group SA rallied to its highest price since February 2008 after swinging to a profit in the second quarter.
The Stoxx Europe 600 Index rose 0.3 percent to 304.15. The measure added 1.8 percent this week as central banks maintained their stimulus and investors weighed company results. It has gained 10 percent since a low on June 24 amid growing optimism that the Fed won’t reduce its bond purchases until the economy gains substantial traction.
“We expect some stability in the economic figures out of the U.S., where we’ll see neither big negative nor big positive news,” Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg, said in a phone interview. “We see any retreat in European equities as an opportunity to add to holdings, because with the stabilization of the political and economic situation, coupled with attractive valuations, this can provide support for equities.”
A gauge of expected volatility in euro-area stocks, measured by options prices, fell 7.2 percent this week, to close at the lowest level since May 22.
U.S. employers added fewer workers than anticipated in July as the jobless rate dropped to 7.4 percent, data showed today. The 162,000 increase in payrolls last month followed a revised 188,000 increase in June that was less than initially estimated, Labor Department figures showed in Washington. The median forecast of 93 economists surveyed by Bloomberg called for a 185,000 gain.
European Central Bank President Mario Draghi said this week economic indicators signal the euro region is past the worst of its longest-ever recession. The euro-area unemployment rate remained unchanged in June amid increasing signs the economy is emerging from its longest-ever recession, a European Union report showed, also this week.
The Stoxx 600 is trading at 13.8 times its members’ estimated earnings, according to data compiled by Bloomberg, compared with a multiple of 15.4 for the Standard & Poor’s 500 Index in the U.S.
UBS AG upgraded its rating of the equity markets in Europe, excluding the U.K., to neutral from underweight. The bank cited an improving economy and availability of credit, coupled with reduced levels of fiscal austerity.
National benchmark indexes rose in 12 of the 18 western European markets. Germany’s DAX and France’s CAC 40 were little changed. The U.K.’s FTSE 100 slid 0.5 percent.
The Swiss Market Index rallied 1.8 percent as markets in Zurich reopened after yesterday’s National Day holiday.
Of the nine Stoxx 500 companies that reported earnings today, five beat profit forecasts, while seven exceeded projections for sales, according to data compiled by Bloomberg.
Axa climbed 2.2 percent to 17.13 euros, its highest price since April 2010. Europe’s second-largest insurer posted first-half operating income of 2.58 billion euros ($3.41 billion), above the 2.38 billion-euro average forecast. Net income fell a less-than-estimated 3 percent.
Allianz SE advanced 0.8 percent to 119.85 euros. Europe’s largest insurer said second-quarter net income rose 27 percent to 1.59 billion euros from a year earlier. That exceeded the 1.33 billion-euro average estimate of 12 analysts surveyed by Bloomberg. The company also said the top end of its target range for operating profit this year.
“We are maintaining our operating-profit outlook for 2013 of 9.2 billion euros, plus or minus 500 million euros, although based on our current projections, we see the figure more toward the upper end of this range,” CEO Michael Diekmann said.
Man jumped 9.5 percent to 91.50 pence, for its largest rally since May 3. The world’s biggest publicly traded hedge-fund manager said first-half adjusted pretax profit increased 9.8 percent to $134 million, with fees for investment gains more than tripling to $90 million.
IAG rose 6.7 percent to 317 pence. The parent of British Airways posted operating profit before one-time items of 245 million euros, compared with a 4 million-euro loss in the year-earlier period.
Royal Bank of Scotland Group Plc lost 3.3 percent to 322.5 pence. Britain’s biggest publicly owned lender posted first-half net income of 535 million pounds ($811 million), after a 2 billion-pound loss in the same period last year. RBS named also Ross McEwan, 56, formerly the head of its U.K. consumer unit, as its Chief Executive Officer.
Deutsche Lufthansa AG, Europe’s second-largest airline, slid 5 percent to 14.67 euros, a three-month low. First-half operating profit plunged 69 percent to 72 million euros, missing the average analyst estimate for 139 million euros.
William Hill Plc fell 7.3 percent, the most since August 2009, to 458.5 pence. The operator of more than 2,300 betting shops said first-half pretax profit was 143.6 million pounds, trailing the average analyst estimate of 152.3 million pounds.