European Stocks Post Third Weekly Gain on Earnings, FedInyoung Hwang
European stocks posted a third weekly gain as companies from Royal Philips NV to Akzo Nobel NV reported profits that beat estimates and U.S. jobs data fueled bets the Federal Reserve will wait until March to pare stimulus.
Philips and Akzo Nobel rose more than 5 percent. Celesio AG jumped 13 percent after McKesson Corp. agreed to buy the German drug wholesaler for 3.9 billion euros ($5.4 billion). Aberdeen Asset Management Plc climbed 11 percent after saying it is in talks to buy Scottish Widows Investment Partnership and form an alliance with Lloyds Banking Group Plc. ABB Ltd. increased 8.5 percent as quarterly profit rose 10 percent.
The Stoxx Europe 600 Index advanced 0.5 percent to 320.09 this week, extending its rally so far this year to 14 percent. The gauge climbed to a five-year high of 320.97 on Oct. 22 as it capped a nine-day winning streak, the longest since June 2010.
“We have profit growth, not a lot of it but we have it,” Steven Bell, a London-based fund manager at F&C Asset Management, which oversees $149 billion, said by telephone. “That constitutes a lukewarm case for equities, but when you consider the alternatives, the attractiveness becomes greater.”
In the U.S., payrolls climbed less than projected in September, data released on Oct. 22, more than two weeks later than scheduled showed. Consumer confidence in the world’s largest economy fell to the weakest this year, according to another report. A Bloomberg survey last week showed economists expect the Fed to delay paring its bond purchases until March as the government’s 16-day partial shutdown this month weighs on fourth-quarter growth.
The addition of 148,000 workers by American employers trailed the median projection in a Bloomberg survey for an increase of 180,000. The unemployment rate fell to 7.2 percent, the lowest level since November 2008.
“There’s still some slack in the U.S. economy and employment continues to rise,” F&C’s Bell said. “The big picture for the Fed is that the economy needs stimulus so let’s give it.”
In China, a private measure of manufacturing strengthened more than forecast this month. The reading of 50.9 for the purchasing managers’ index from HSBC Holdings Plc and Markit Economics beat the 50.4 median estimate from analysts surveyed by Bloomberg News. Fifty is the threshold for expansion.
The advance reading of a composite index for euro-area manufacturing and services dropped to 51.5 this month from 52.2 in September. The median economist forecast had called for an increase to 52.4.
National benchmark indexes rose in 10 of the 18 western European markets this week. The U.K.’s FTSE 100 advanced 1.5 percent. Germany’s DAX gained 1.4 percent to a record. France’s CAC 40 fell 0.3 percent.
Philips climbed 5.4 percent. The world’s biggest lighting manufacturer said third-quarter earnings before interest, taxes, amortization and one-time items rose to 634 million euros, compared with the 567 million-euro average estimate.
Akzo Nobel gained 6 percent. The Dutch maker of Dulux paint said Ebitda climbed 7 percent to 456 million euros. Analysts on average had estimated 444 million euros.
Celesio jumped 13 percent for the biggest weekly gain in the Stoxx 600. McKesson, the largest U.S. pharmaceutical distributor, agreed to buy a majority stake in the German company and make a tender offer for the remaining publicly traded stock.
Aberdeen Asset Management, Scotland’s largest fund manager, added 11 percent. The company said it’s in talks with Lloyds about a possible acquisition of the lender’s Scottish Widows unit and the formation of a “strategic partnership.”
ABB rallied 8.5 percent. The world’s biggest maker of power transformers said third-quarter net income rose to $835 million. The average estimate of analysts surveyed by Bloomberg had called for $789 million.
Software AG surged 12 percent after reiterating that its business-process unit will increase revenue by as much as 22 percent this year. Germany’s second-biggest software maker also announced a share buyback.
STMicroelectronics NV tumbled 12 percent. Europe’s biggest semiconductor maker reported lower sales and a $142 million net loss in the third quarter. STMicro also delayed a profitability target after splitting up its venture with Ericsson AB.
Kering SA fell 2.7 percent after its Gucci brand posted the worst sales growth in four years as demand waned in China. The luxury-goods maker said third-quarter sales from continuing operations slid to 2.52 billion euros. Analysts in a Bloomberg survey had predicted 2.55 billion euros.
Renault SA declined 3.3 percent. The French carmaker said weaker emerging-market currencies cut third-quarter revenue by 3.2 percent to 8 billion euros. That missed the 8.5 billion-euro average forecast of analysts surveyed by Bloomberg.