European Stocks Gain as Bayer Rallies on Spinoff PlansJonathan Morgan
European stocks rose for a second day, after Federal Reserve Chair Janet Yellen indicated interest rates won’t increase anytime soon, and Bayer AG rallied on plans to spin off its plastics unit.
Bayer contributed the most to the Stoxx Europe 600 Index’s gain. Sulzer AG jumped the most in almost three years after saying it is in talks with Dresser-Rand Group Inc. about a possible transaction. TUI Travel Plc rose 4.7 percent after Morgan Stanley upgraded the shares. EasyJet Plc advanced after saying it will increase its dividend-payout ratio and exercise purchase rights for 27 Airbus Group NV A320 planes.
The Stoxx 600 climbed 1 percent to 347.78 at the close of trading, its highest level in two weeks. The equity gauge extended gains after data showed the number of Americans filing applications for unemployment benefits plunged last week to a two-month low. The index is heading for a 1 percent weekly gain.
“There is still this tremendous environment for equities with the Fed indicating that it is not ready to raise interest rates right now and we still have a helpful weak euro for export-orientated companies,” Robert Halver, head of capital-markets research at Baader Bank AG in Frankfurt, said in a telephone interview.
The Fed tapered monthly bond buying by $10 billion for a seventh time, staying on course to end the program in October. Policy makers said the economy is expanding at a moderate pace and inflation is below target, while maintaining a commitment to keep interest rates near zero for a “considerable time” after asset purchases end.
Jobless claims in the U.S. decreased by 36,000 to 280,000 in the period ended Sept. 13, the Labor Department said today in Washington. The median forecast of economists surveyed by Bloomberg called for drop to 305,000.
Results of the European Central Bank’s first targeted-lending program showed a lower-than-forecast allotment of funds. The Frankfurt-based central bank said it alloted 82.6 billion euros ($106.5 billion) at a fixed interest rate of 0.15 percent. Estimates in a Bloomberg News survey of economists ranged from 100 billion euros to 300 billion euros, with a median of 150 billion euros.
Voters in Scotland will today decide whether to break from the U.K. in a ballot that could spell the end of a three-century-old union. Polling stations opened at 7 a.m. local time and will close at 10 p.m. With a record 97 percent of the electorate registered to vote and turnout forecast to be more than 85 percent, the result may not be known until 6 a.m. or later tomorrow.
The FTSE 100 Index advanced 0.6 percent. The benchmark index fell 0.4 percent this week through yesterday amid uncertainty surrounding a potentially independent Scotland. A measure of expected volatility for FTSE 100 shares has surged 47 percent since its low on Aug. 27.
National benchmark indexes rose in 16 of the 18 western European markets today. Germany’s DAX jumped 1.4 percent and France’s CAC 40 added 0.8 percent.
Bayer climbed 6.2 percent to 112.70 euros, its highest price since at least 1992. Germany’s biggest drugmaker, which is focusing on its lucrative life-sciences operations, said its plastics business will be listed on the stock market as a separate company. The decision is subject to approval by the supervisory board.
Sulzer jumped 8.1 percent to 136 Swiss francs. The pumpmaker is considering expanding its energy-equipment business through a combination with Dresser-Rand.
TUI Travel advanced 4.7 percent to 384 pence, its biggest gain since June 2012. Morgan Stanley upgraded the shares to overweight from equal weight and added the stock to its best ideas list, citing an expected 12 percent compound annual earnings growth rate from 2014 to 2017, as well as savings after its all-share merger with TUI AG.
EasyJet climbed 0.5 percent to 1,344 pence, paring earlier gains of as much as 2.8 percent. Europe’s second-biggest discount airline said it will increase the ordinary dividend payout ratio to 40 percent of profit after tax from one-third. It will take delivery of the single-aisle airliners from 2015 through 2018.
Booker Group Plc rose 7.8 percent to 125.4 pence. The food wholesaler reported a 1.8 percent increase in second-quarter like-for-like sales, excluding its Makro business, and said it is on course to meet forecasts for the year through March 2015.