Europe Shares Rise in Late Trade as Oil Boosts Energy Companies

  • BASF declines on profit miss, charge; oil rebounds from loss
  • Markets may find floor if Fed dovish today, economist says

European stocks erased declines to advance in the final minutes of trading as oil rebounded and investors assessed value after some disappointing earnings reports.

A measure of energy companies recovered in afternoon trade as oil rose after data showed stockpiles at the biggest U.S. storage hub dropped. Royal Dutch Shell Plc added 2.9 percent after winning shareholder approval to buy BG Group Plc, which gained 3.5 percent. BASF SE lost 1.8 percent after the world’s largest chemical maker said it will book a 600-million euro ($652 million) charge in the fourth quarter because of lower oil and gas prices.

The Stoxx Europe 600 Index advanced 0.3 percent to 340.24 at the close of trading, erasing losses of as much as 1 percent. The index is heading for a monthly decline of 7 percent, its biggest since August. Shares are trading at about 14.6 times projected earnings, the lowest in more than a year. A measure of volatility in the market has risen 25 percent in January and reached its highest level since September last week.

“Nobody is really sure where we go from here, and nobody is brave enough to make the call,” said Peter Dixon, Commerzbank AG’s global equities economist in London. “Corporate-earnings season won’t provide much of a support -- markets may find a floor if the Fed is extremely dovish tonight. At least investors will have time to think and reassess valuations.”

The Federal Reserve releases a monetary-policy statement after the close of European trading. Investors will be looking for indications of the U.S. central bank’s intentions regarding interest rates after January’s market turmoil. Traders are pricing in zero percent chance of a rate hike this month and 25 percent odds of an increase in March.

Volatile oil prices have hamstrung global stocks as the two asset classes have become the most correlated since 2013. An increase in oil prices on Tuesday fueled a rebound in European commodity and energy producers, while better-than-expected corporate updates also boosted sentiment. Oil fell in early trading today, before rebounding after the U.S. data, which also showed nationwide crude supplies climbed to the highest level since 1930.

Among stocks moving on financial updates, Novartis AG dropped 3.7 percent after the Swiss drugmaker posted earnings and sales that missed projections. Ericsson AB slid 6.3 percent as its fourth quarter was less profitable than analysts predicted.

Italian banks led a gauge of lenders lower after the government and the European Commission agreed on a plan to help them offload bad debt. Banca Popolare dell’Emilia Romagna SC and Banco Popolare SC lost more than 4 percent. Royal Bank of Scotland Group Plc slipped 2 percent after saying it will take a 3.6 billion-pound ($5.2 billion) hit to the value of its assets and set aside more money for past misconduct, pushing it to an eighth consecutive annual loss.

ARM Holdings Plc, the semiconductor designer whose technology is used in most smartphones, slid 1.9 percent after Apple Inc. forecast its first drop in sales since 2003. Dialog Semiconductor Plc retreated 0.9 percent and AMS AG dropped 2 percent.

Assicurazioni Generali SpA declined 1.3 percent after the Italian insurer said its chief executive officer won’t serve another term. Mario Greco will join rival Zurich Insurance Group AG from May, according to a separate statement from the Swiss company.

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