European Stocks Rebound From Biggest Drop in Four WeeksNamitha Jagadeesh
Ericsson AB’s cost-cutting plan and KBC Groep NV’s better-than-estimated earnings helped European stocks rebound from an intraday drop led by energy producers and utilities.
The Stoxx Europe 600 Index gained 0.2 percent to 335.86 at the close of trading, after rising as much as 0.6 percent and falling as much as 0.4 percent. The gauge tumbled 1.1 percent yesterday, the biggest slide in four weeks, as banks retreated amid concern that prosecutions and penalties will widen in a probe into the rigging of exchange-rate benchmarks.
“Markets are concentrating on company news at the moment, rather than macroeconomic or geopolitical news,” Herbert Perus, who helps oversee $36 billion at Raiffeisen Capital Management, said by phone from Vienna. “Stocks of companies with good numbers are proceeding higher and those with bad numbers are underperforming. This is a good sign for normalization of market-participant behavior.”
The Stoxx 600 has rebounded 8.3 percent from this year’s low on Oct. 16 as the Bank of Japan unexpectedly boosted its stimulus and some companies reported better-than-estimated results. The gauge trades at 15.2 times the projected earnings of its members, more than a fifth higher than the 10-year average, according to data compiled by Bloomberg.
A gauge of technology companies posted the second-best performance among the 19 industry groups in the Stoxx 600.
Ericsson rose 3.2 percent after announcing a plan to cut costs by 9 billion kronor ($1.2 billion). The measure, which includes an unspecified number of job cuts, will take full effect in 2017, the company said.
KBC Groep climbed 6.1 percent, the biggest rally in 15 months, after the Belgian lender posted third-quarter net income that beat analyst projections.
RWE AG fell 2.2 percent as nine-month profit fell 60 percent. Abengoa SA tumbled 18 percent, leading a gauge of energy-industry companies lower. Aegon NV slid 6.1 percent after posting quarterly net income that was about a third of the average analyst estimate.