Europe Stocks Gain as RWE, Vodafone Rise on M&A ActivityJonathan Morgan
European stocks advanced, following their biggest weekly drop since January, as companies from RWE AG to Vodafone Group Plc rose amid renewed merger-and-acquisition activity.
RWE increased 1.3 percent after L1 Energy agreed to spend 5.1 billion euros ($7.1 billion) on the utility’s Dea division. Vodafone climbed 1.7 percent as the telecommunications company agreed to buy Spanish cable operator Grupo Corporativo Ono SA. Allianz SE rose the most in two months after the insurer agreed to buy assets from Italy’s Unipol Gruppo Finanziario SpA.
The Stoxx Europe 600 Index added 1.1 percent to 325.83 at the close of trading. The benchmark fell 3.3 percent last week as investors awaited Crimea’s March 16 referendum on whether to leave Ukraine and join Russia.
“The geopolitical issues have been put to the side and investors are back to fundamentals,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “The M&A activity is turning sentiment positive. Now, if we can get better economic numbers in the months ahead, I think equities could rebound from the recent correction.”
In Crimea, 96.8 percent of voters opted to secede from Ukraine in yesterday’s poll, according to the head of the election commission. The European Union issued a statement saying “the referendum is illegal and illegitimate and its outcome will not be recognized.”
EU foreign ministers agreed to impose travel bans on 21 Russians, Crimeans and former Ukrainian officials, following a meeting in Brussels today. The ministers also froze the group’s assets. The U.S. leveled sanctions on seven Russians, including aides or advisers to President Vladimir Putin. The leaders of the 28-nation EU will discuss further measures when they meet later this week.
In the U.S., a gauge of manufacturing in the New York area rose less than forecast, climbing to 5.61 in March from 4.48 in February. Analysts surveyed by Bloomberg had predicted a reading of 6.50. The Federal Reserve’s gauge of industrial production rose 0.6 percent in February, following a revised 0.2 percent decline in January. Economists had forecast output would climb 0.2 percent.
National benchmark indexes advanced in every western-European market except Iceland today. France’s CAC 40 added 1.3 percent and Germany’s DAX climbed 1.4 percent. The U.K.’s FTSE 100 increased 0.6 percent.
RWE rose 1.3 percent to 28.84 euros after agreeing to sell its Dea oil-and-gas business to L1 Energy, the investment vehicle of Russia’s fourth-richest man Mikhail Fridman. Earlier this month, RWE posted its first full-year loss since the foundation of the Federal Republic of Germany in 1949.
Vodafone climbed 1.7 percent to 226 pence after saying it will spend 7.2 billion euros on Ono. The acquisition gives the telecommunications operator 1.9 million cable customers in Spain. It will generate about 2 billion euros of savings and 1 billion euros of revenue synergies, according to a statement.
Allianz added 2 percent to 122.90 euros. Europe’s biggest insurer agreed to spend 440 million euros buying assets from Unipol. They include a portfolio with 1.1 billion euros of premiums, 729 agencies and 500 employees.
Persimmon Plc, the U.K’s biggest housebuilder by market value, gained 3.7 percent to 1,361 pence after U.K. Chancellor of the Exchequer George Osborne announced that he will extend the Help-to-Buy stimulus program for new properties to 2020 from its current expiry date of April 2016.
Barratt Developments Plc rose 3.1 percent to 424.8 pence and Taylor Wimpey Plc climbed 2.1 percent to 118.2 pence. The British government allows people to buy a new house or flat costing as much as 600,000 pounds ($1 million) with a 5 percent deposit under Help to Buy.
Siemens AG climbed 3.4 percent to 93.69 euros, its biggest gain since July, after Bank of America Corp. upgraded Europe’s largest engineering company to buy from neutral. The brokerage said the shares will benefit from a buyback and growth in Siemens’s automation markets. The U.S. investment bank gave a price forecast of 106 euros.
Voestalpine AG jumped 5.6 percent to 30.39 euros after Credit Suisse Group AG upgraded the Austrian steelmaker to outperform from neutral, meaning that investors should buy the shares. The brokerage said that Voestalpine generates less than 1 percent of its revenue from Ukraine, so escalating tension in the country should not hurt the shares any further.
Porsche Automobil Holding SE increased 1.3 percent to 73.18 euros after a German court dismissed a lawsuit brought by hedge funds against the luxury carmaker. The 23 funds had sought 1.4 billion euros from Porsche’s aborted takeover of Volkswagen AG in 2008.
Linde AG lost 2.6 percent to 139.90 euros after reporting profit that missed analysts’ estimates. The producer of industrial gases posted fourth-quarter earnings before interest, taxes, depreciation and amortization of 970 million euros, less than the average analyst estimate of 992.3 million euros in a Bloomberg survey.
Pirelli & C. SpA retreated 2.2 percent to 11.77 euros after saying that OAO Rosneft, Russia’s biggest oil producer, has become its largest investor. Private-equity firm Clessidra SGR SpA exited the Italian tiremaker as part of the transaction, Pirelli said in a statement.