European Stocks Advance as Alstom, ING Rise on EarningsSofia Horta e Costa
European stocks climbed to a five-year high after companies from Alstom SA to ING Groep NV posted earnings that beat analysts’ estimates, and as industrial data from Germany and the U.K. improved.
Alstom gained the most in 16 months after posting operating profit that exceeded estimates and saying it will seek to raise as much as 2 billion euros ($2.7 billion) from asset sales. ING jumped 3.5 percent after net income beat projections. Adecco SA rose 3.6 percent after the world’s largest provider of temporary workers predicted that demand for flexible labor will increase in Europe as the economy recovers.
The Stoxx Europe 600 Index added 0.4 percent to 323.26 at the close of trading, its highest level since May 22, 2008. The equity benchmark has rallied 16 percent so far in 2013, its best performance since 2009.
“As long as the macro improvement remains, investors will continue to expect a rebound in corporate earnings,” said Dirk Thiels, who helps oversee 65 billion euros as head of investment management at KBC Asset Management NV in Brussels. “The strong rally we’ve had in Europe shows the market is pricing in earnings upgrades. Even if earnings growth may lag the economy this season, we are willing to wait another quarter to see evidence of a turnaround.”
A report from the Office for National Statistics showed U.K. industrial production rose 0.9 percent in September, rebounding from its biggest decline in almost a year and exceeding the median forecast for growth of 0.6 percent.
A release from Germany’s Economy Ministry showed factory orders in Europe’s largest economy increased 3.3 percent in September. That exceeded the 0.5 percent median estimate of economists surveyed by Bloomberg News.
Markit Economics’ gauge of services industries in the 17-nation euro area fell at a slower-than-projected rate in October. A separate report from the European Union’s statistics agency showed that retail sales in the currency bloc increased 0.3 percent in September from last year, less than the 0.6 percent gain that economists had predicted.
The European Central Bank will cut its benchmark interest rate to 0.25 percent at tomorrow’s meeting, according to three out of 70 estimates compiled by Bloomberg. Eight of 38 economists in a separate survey forecast policy makers will lower interest rates in December.
National benchmark indexes climbed in every Western-European market except the U.K. and Iceland. The U.K.’s FTSE 100 fell 0.1 percent, while Germany’s DAX increased 0.4 percent. France’s CAC 40 rose 0.8 percent.
Alstom, the French maker of trains, gained 5.8 percent to 28.67 euros, its biggest advance since June 2012. Operating profit in the period between April 1 and Sept. 30 fell to 695 million euros from 703 million euros last year. That still beat the average analyst estimate of 664 million euros. Chief Executive Officer Patrick Kron said the company will seek to sell a minority stake in Alstom Transport SA and other assets, according to a statement.
ING added 3.5 percent to 9.60 euros, rebounding from its biggest loss since August. Net income dropped 85 percent to 101 million euros in the third quarter from a year earlier, following a 950 million-euro writedown on the sale of its South Korean life insurance unit. Analysts had predicted a 27.3 million-euro loss. The Dutch financial-services company also said it has reached an agreement with the European Commission to sell more than 50 percent of ING Life Japan by the end of 2015.
Adecco climbed 3.6 percent to 68.50 Swiss francs after saying third-quarter net income surged 61 percent to 190 million euros. That exceeded the 138.2 million-euro average estimate of five analysts in a Bloomberg survey. Sales dropped less in France this quarter, its largest market, while revenue from Spain and Portugal showed its first quarterly increase in more than two years, Adecco said in a statement.
Axel Springer AG, the publisher of the Die Welt and Bild-Zeitung newspapers in Germany, advanced 2 percent to 44.28 euros. Third-quarter sales rose 3.6 percent to 815.8 million euros from last year, beating the 808 million-euro average estimate compiled by Bloomberg.
Vestas Wind Systems A/S surged 15 percent to 167.20 kroner, its highest price since May 2011. The world’s largest wind-turbine maker forecast an earnings-before-interest-and-taxes margin of at least 2 percent in 2013, up from 1 percent in the second quarter. Vestas also said free cash flow will exceed 500 million euros and may climb as high as 700 million euros, more than double the previous estimate.
K&S AG dropped 3.7 percent to 20.05 euros after Moody’s Investors Service cut its rating on the fertilizer producer’s debt to below investment grade. The credit-rating company cited declining potash prices and said K&S may need to raise additional debt to invest in a mine in Canada.
Experian Plc slumped 6.4 percent to 1,182 pence, its biggest decline in five years. The credit-reporting service said it will stop its share buybacks after agreeing to spend $850 million on buying Passport Health Communications Inc., a U.S. provider of data and software for health-care payments. Experian said in May that it planned to buy back $500 million of shares over the following 12 months.