European Stocks Advance for Second Day on Earnings, M&A BoostInyoung Hwang
European stocks had their biggest two-day gain in two weeks as companies from Bayer AG to PSA Peugeot Citroen reported better-than-estimated earnings and deals activity intensified.
Bayer and Peugeot rose more than 3.9 percent. GlaxoSmithKline Plc climbed 3.5 percent after the U.K.’s biggest drugmaker posted second-quarter profit that declined less than analysts had estimated. Barclays Plc added 1.8 percent and Numericable-SFR SAS added 3 percent as profit rose. Italcementi SpA surged 49 percent as HeidelbergCement AG said it will buy it. The German company lost 6.3 percent.
The Stoxx Europe 600 Index gained 1 percent to 394.01 at the close of trading in London. It rose for the first time in six days on Tuesday amid earnings that topped projections and takeover activity. Dealmaking is on track for the busiest third quarter on record, with volume set to surpass $1 trillion.
“EPS and top line beats are quite good,” said Tobias Britsch, who helps oversee about $30 billion at Meriten Investment Management in Dusseldorf, Germany. “M&A activity will continue. It’s companies making use of high cash piles to buy top-line growth to react to lower organic growth. But it’s also them making use of the good financing environment to further develop their businesses. I would see it as more positive.”
Quintain Estates & Development Plc jumped 22 percent after a Lone Star Funds affiliate agreed to purchase it. Solvay SA slipped 3 percent after agreeing to acquire Cytec Industries Inc. for $5.5 billion.
Man Group Plc rallied 7.6 percent after the world’s largest publicly traded hedge-fund firm posted first-half profit that beat analysts’ expectations as performance fees almost doubled. British American Tobacco Plc gained 3.6 percent and Royal KPN NV advanced 3.7 percent after reporting earnings that topped analysts’ estimates. LVMH Moet Hennessy Louis Vuitton SE advanced 1.9 percent after posting its biggest earnings gain in three years. Total SA climbed 2.6 percent as production and refining rose, almost making up for a crude price slump.
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Volkswagen AG lost 2.3 percent after lowering its global sales forecast amid a slowdown in China and challenging markets in Russia and South America. LafargeHolcim Ltd. fell 2.7 percent after as analysts said second-quarter earnings at Lafarge and Holcim were below consensus.
The Stoxx 600 is heading for a 3.3 percent gain in July, after rebounding from a five-month low as concern that Greece may leave the euro faded. It’s advanced 15 percent this year.
Investors will also be watching for comments from the Federal Reserve, which releases its policy statement after the close of European markets on Wednesday.
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