Earnings Optimism Lifts European Stocks as Carrefour, ASML Climb

  • Zalando, Carrefour advance more than 4% after earnings
  • Stoxx Europe 600 Index trading in narrow range since mid-July

European Stocks Rise for a Second-Straight Day

European stocks erased declines and posted their first back-to-back gains in two weeks amid better-than-estimated earnings.

Zalando SE and Carrefour SA led the region’s retailers higher after the German online company raised its profitability forecast and the French grocer reported sales that beat projections. ASML Holding NV climbed 2.2 percent after Europe’s largest semiconductor-equipment maker forecast fourth-quarter profitability above analysts’ expectations. Automakers climbed amid a weaker euro. Energy producers advanced with oil.

The Stoxx Europe 600 Index added 0.3 percent at the close of trading, reversing a slide of as much as 0.4 percent. While analysts forecast a 4.5 percent contraction in profit for members of the gauge this year, the first companies reporting are bringing some optimism. Investors are also waiting for tomorrow’s European Central Bank meeting for clues on the direction of monetary policy.

“Earnings are helping, but big moves can only come on the back of the ECB meeting tomorrow,” said Witold Bahrke, a macro strategist at Nordea Investment Funds SA in Luxembourg. “The rate moves really have a big influence on equities and there’s a lot of trans-Atlantic correlation. What I’d like to see are more signs final demand will pick up.”

The ECB concludes a two-day policy meeting on Thursday and investors will seek indications of whether the central bank is prepared to take further steps to augment its stimulus program. Most economists in a Bloomberg survey predict it will prolong its 1.7 trillion-euro ($1.9 trillion) bond-buying program in December. As the Federal Reserve prepares to tighten monetary policy, its Beige Book survey of regional conditions in the U.S., due after the close of European trading, will be in focus for signs of the likely trajectory of borrowing costs in the world’s biggest economy.

After reaching a four-month high in September, European equities failed to continue the advance on speculation central banks across the globe may become less accommodative. The Stoxx 600 has traded in a range of 18 points since mid-July, while a measure of volatility has fallen to its lowest level in almost a month.

Among other stocks moving on corporate news today:

  • Rentokil Initial Plc climbed 4.5 percent to a 14-year high after the pest-control and cleaning group said revenue rose in the third quarter and reiterated its full-year guidance. 
  • Accor SA advanced 5 percent, the most since June, after Europe’s largest hotel operator posted an increase third-quarter sales.
  • Reckitt Benckiser Group Plc declined 2.6 percent, its biggest drop since January, after the maker of Durex condoms and Nurofen painkillers said revenue growth this year will be at the bottom of its forecast range.
  • Travis Perkins Plc lost 4.4 percent, the most since July, after projecting full-year adjusted earnings below consensus estimates.
  • Svenska Handelsbanken AB slid 1.6 percent after its chief executive officer said that its regulatory capital equivalent of almost one quarter of risk-adjusted assets might not be enough to deal with future requirements.
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