Lloyds Leads Lender Gains to Help Europe Stocks Snap 2-Day Dropby and
RSA rises after operating profit jumped, boosting FTSE 100
Technip, Solvay up after earnings, Zodiac Aerospace slumps
Gains in lenders after earnings from Lloyds Banking Group Plc pushed European stocks higher for the first time in three days.
Lloyds jumped 14 percent after raising its dividend and introducing a special payment. RSA Insurance Group Plc surged 9.8 percent after its annual operating profit rose 43 percent. The Stoxx Europe 600 Index added 2 percent at the close of trading.
“The Lloyds figures were good this morning and anyway the bank selloff is overdone,” said Patrick Spencer, equities vice chairman at Robert W. Baird & Co. in London. “People weren’t looking for fireworks in the earnings seasons and results haven’t been disastrous. European banks aren’t in as good a shape as in the U.S., but we’re not in a recession and valuations are reasonable.”
The Stoxx 600 has tumbled 21 percent since a record reached in April, making its stocks cheaper. It’s trading at 14.5 times estimated earnings, down from an April high of 16.7. And while Europe’s economic data have been missing estimates, the region is still forecast to expand every quarter this year.
Spain’s IBEX 35 Index, among the most battered this year, posted the best performance in western Europe, up 2.5 percent. Buoyed by gains in Lloyds and RSA, the U.K.’s FTSE 100 Index also gained 2.5 percent.
Among other shares active on corporate news, Technip SA rallied 12 percent after its revenue beat estimates and its net cash position improved from a year earlier. Solvay SA climbed 5.6 percent after its 2016 profit forecast exceeded analyst predictions. Repsol SA advanced 2.7 percent after its net income topped projections.
Anheuser-Busch InBev NV dropped 1.7 percent after its quarterly earnings missed estimates. Zodiac Aerospace tumbled 25 percent after forecasting a recovery will take longer than the 18 months initially planned and saying it won’t meet its full-year operating margin target.
Despite rising to a three-week high on Monday, the Stoxx 600 is heading for its third monthly decline. It has fallen 11 percent in 2016 amid concern over China’s slowdown, routs in banks and oil, and dissipating faith in central-bank support. The benchmark hasn’t posted back-to-back gains since December.