European Stocks Are Little Changed, Post Weekly DeclineJonathan Morgan
European stocks were little changed, halting five days of losses, amid increased takeover activity and as investors bet the financial troubles of Banco Espirito Santo SA won’t spiral into an euro-area banking crisis.
Imperial Tobacco Group Plc rose to the highest price since at least 1996 after confirming talks with Reynolds American Inc. and Lorillard Inc. to buy some assets and brands. Symrise AG climbed as a report said Japan’s Ajinomoto Co. may be interested in buying the German maker of flavors and fragrances. Indesit Co. added 2.9 percent after Whirlpool Corp. agreed to pay $1 billion for a controlling stake in the Italian appliance maker.
The Stoxx Europe 600 Index added 0.2 percent to 336.91 at the close in London after rising as much as 0.5 percent. The benchmark gauge lost 3.2 percent this week, the most since March, as investors weighed valuations near the highest levels since 2009 and as concern resurfaced that the region remains vulnerable to shocks.
“The move looks overdone,” Ion-Marc Valahu, a co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Banco Espirito Santo appears to be an isolated incident.”
National benchmark indexes climbed in 13 of 18 western-European markets. France’s CAC 40 added 0.4 percent, the U.K.’s FTSE 100 rose 0.3 percent and Germany’s DAX advanced less than 0.1 percent.
The Stoxx 600 lost 3.6 percent in the past five days and Portugal’s PSI 20 Index plunged to a nine-month low yesterday after the parent of Banco Espirito Santo delayed making payments on some short-term debt. The lender disclosed an exposure of 1.18 billion euros ($1.6 billion) to group companies.
The Espirito Santo group’s financial troubles are unlikely to have systemic implications for the euro area, Goldman Sachs Group Inc. said in a note. Portuguese bank assets account for only 1.6 percent of the region’s total, foreign banks’ exposure to Portugal is low and the European Central Bank stands ready to support all banks, Goldman Sachs said.
Portugal has sufficient bank-recapitalization funds, and Espirito Santo is not a threat to the country’s financial system, Barclays Plc analysts led by Antonio Garcia Pascual wrote in a note.
Banco Espirito Santo slid 5.5 percent to 48.1 euro cents, completing a weekly plunge of 36 percent, the biggest since at least 1993, according to data compiled by Bloomberg.
Imperial Tobacco gained 3.1 percent to 2,740 pence. Reynolds, the producer of Camel cigarettes, said it’s in talks to acquire Lorillard and the two partners are considering which parts of the combined business to sell to allay antitrust concerns. Imperial Tobacco confirmed it is in talks to buy some of those assets and brands.
Symrise climbed 2.7 percent to 40.24 euros. Platow Brief reported that Ajinomoto hired an investment bank to prepare a deal to buy Symrise. Archer-Daniels-Midland Co. agreed earlier this week to buy Wild Flavors GmbH for 2.3 billion euros, spurring speculation of consolidation in the industry.
Indesit added 2.9 percent to 10.83 euros. Whirlpool, the American manufacturer of Maytag and KitchenAid appliances, agreed to buy a 60 percent stake that represents about 67 percent of the Italian company’s voting rights.
HeidelbergCement AG, the world’s third-largest maker of cement, retreated 2.7 percent to 59.83 euros after Natixis SA downgraded the shares to reduce from neutral.
(An earlier version was corrected to remove incorrect size of move in headline.)