Europe Stocks Rise as Data Signals Need for StimulusJonathan Morgan
European stocks rose to the highest level this month as investors bet that a slowdown in euro-area manufacturing and services growth will increase pressure on the European Central Bank to do more to support the recovery.
Raiffeisen Bank International AG rallied 11 percent after posting second-quarter net income that exceeded analysts’ projections. Nobel Biocare Holding AG advanced 3.9 percent after raising its 2014 profit-margin forecast. Fresnillo Plc led mining companies lower.
The Stoxx Europe 600 Index added 0.7 percent to 337.51 at the close of trading. The benchmark measure has climbed 3.9 percent from a low reached on Aug. 8 as concern eased over the conflict in Ukraine. The volume of shares changing hands in the gauge’s stocks was 22 percent lower than the 30-day average for this time of the day, according to data compiled by Bloomberg.
“The European economy is not falling off the rails but it could use a little bit of a push,” Ben Kumar, an investment manager who helps manage $7 billion at Seven Investment Management LLP in London, said by phone. “This leaves room for stimulus which is making investors more optimistic.”
National benchmark indexes climbed in 16 of the 18 western European markets. France’s CAC 40 rose 1.2 percent, Germany’s DAX added 0.9 percent and the FTSE 100 gained 0.3 percent.
Euro-area manufacturing and services activity slowed in August, a preliminary report showed today. A purchasing managers’ index for both industries fell to 52.8 this month from 53.8 in July, Markit Economics said. Economists predicted a decline to 53.4, according to the median of 20 estimates in a Bloomberg News survey. Numbers above 50 indicate expansion.
ECB President Mario Draghi said this month policy makers have intensified preparation to buy asset-backed securities. In June, the bank introduced targeted long-term refinancing operations to improve bank lending in the non-financial private sector.
In China, a report showed a manufacturing gauge fell in August by more than analysts estimated. The preliminary PMI from HSBC Holdings Plc and Markit Economics slid to 50.3, trailing a median projection of 51.5.
Minutes from the Federal Reserve’s July meeting showed officials raised the possibility that stimulus might end sooner than anticipated even as they acknowledged persistent slack in the labor market. The Fed is on pace to wind down its bond purchases in October, and intends to keep the benchmark interest rate low for a “considerable time” after that.
Raiffeisen Bank gained 11 percent to 20.75 euros after saying it will stay put in Russia as it expects “very low” impact on its business from sanctions against that country. The Vienna-based lender also said group net income in the second quarter rose 53 percent to 183 million euros ($243 million). That beat the average estimate of 136 million euros in a company survey of 17 analysts.
Nobel Biocare rose 3.9 percent to 17.35 Swiss francs. The Swiss maker of dental implants expects to improve its margin on earnings before interest and taxes, excluding any non-recurring realignment costs, by about 150-200 basis points from 12.1 percent in 2013. The company earlier projected an increase of 100 basis points. A basis point is one-hundredth of a percentage point.
Air Berlin Plc surged 18 percent to 1.53 euros, its biggest rally since 2008. The company posted a second-quarter net income of 8.6 million euros, compared with a loss of 38 million euros a year earlier. Air Berlin also said it will reduce its capacity by 10 percent.
Getinge AB increased 4.3 percent to 178 kronor, its biggest gain in five months. Svenska Handelsbanken AB upgraded the shares to buy from reduce, citing improved market conditions for the Swedish maker of sterilization systems.
Fresnillo Plc, the world’s biggest primary silver producer, slipped 3.6 percent to 938 pence. Randgold Resources Ltd., a gold miner in Africa, retreated 1.9 percent to 4,904 pence. A gauge of commodity producers posted the worst performance among the 19 industry groups in the Stoxx 600.
RTL Group SA dropped 7 percent to 74.81 euros. The broadcaster said first-half revenue fell 2.5 percent from a year earlier. It also said it expects a decrease in annual sales.