European Stocks Climb as German Confidence Rises
European stocks gained for a fourth day, extending a 10-week high, as companies posted better-than-estimated earnings and German investor confidence climbed.
EON SE (EOAN) rose the most in six weeks after Germany’s biggest utility posted first-half profit that exceeded analysts’ projections. GAM Holding (GAM) AG, a Swiss asset manager, surged the most in four years as earnings more than tripled. Banca Monte dei Paschi di Siena SpA led Italian banks higher as the nation’s 10-year yield premium over benchmark German bunds shrank to the lowest in two years.
The Stoxx Europe 600 Index climbed 0.6 percent to 307.79 at the close of trading, the highest level since May 28. The gauge gained 0.6 percent last week as China’s industrial output rose more than estimated. The index has soared 10 percent in 2013, led by automobile and financial-services companies, as central banks around the world maintained stimulus measures.
“There’s been a bias towards companies meeting or beating expectations,” James Buckley, a London-based fund manager at Baring Asset Management Ltd., which oversees about $50 billion, said by telephone. “That coupled with slightly better macro data coming out of Europe and even a lessening in fears over Chinese data has all contributed to a bit more confidence. It’s all produced a positive environment for European equities.”
Investor confidence in Germany, Europe’s largest economy, rose more than forecast in August. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations advanced to 42 from 36.3 in July.
A report in Washington showed U.S. retail sales climbed for a fourth consecutive month in July, increasing 0.2 percent. The median forecast of 81 economists surveyed by Bloomberg had called for a 0.3 percent advance.
National benchmark indexes advanced in all of the 18 western European markets today, except Greece and Iceland. The U.K.’s FTSE 100 (UKX) rose 0.6 percent, Germany’s DAX added 0.7 percent and France’s CAC 40 increased 0.5 percent.
EON rallied 2.2 percent to 12.50 euros, the biggest gain since June 26. The company reported first-half underlying net income of 1.91 billion euros ($2.54 billion), topping the average analyst estimate of 1.79 billion euros.
RWE AG, the second-largest utility in Germany, increased 4.5 percent to 22.36 euros, the biggest jump in four months.
GAM Holding jumped 9.7 percent to 16.90 Swiss francs, the largest gain since April 2009. The asset manager that split from Julius Baer Group Ltd. almost four years ago said first-half profit more than tripled after fee and commission income increased.
Monte Paschi surged 7.7 percent to 22.5 euro cents in Milan. The bank is the most exposed lender in the country to Italy’s sovereign debt, holding about 29 billion euros of bonds at the end of June. Banca Popolare dell’Emilia Romagna Scrl advanced 4 percent to 5.48 euros.
The yield premium investors demand to hold Italian and Spanish 10-year bonds over benchmark German bunds shrank to the lowest in two years amid speculation the euro-area economy is edging back to growth. The Italy-Germany spread narrowed to 240 basis points and Spain’s yield gap over Germany slid to 268 basis points today.
Fresnillo Plc rallied 5.6 percent to 1,165 pence, for a fifth day of gains, as UBS AG initiated coverage of the gold and silver producer with a buy rating. Analysts led by Daniel Major cited the company’s low costs and ability to generate free cash flow even as the price of precious metals slips.
Deutsche Wohnen AG climbed 1.8 percent to 14.10 euros, the highest in more than two months. Germany’s second-largest residential landlord by market value said first-half profit jumped 85 percent as acquisitions increased rental income. The company raised its earnings forecast for 2013.
Geberit AG sank 7.3 percent, the most since March 2009, to 236.30 francs. The Swiss maker of toilets and bathroom piping said there’s been “a clear fall in demand” in most European markets since the fourth quarter of 2012 and a continued downturn in public construction in North America.
“An end to this trend, or a recovery, is not in sight,” Geberit wrote in a statement today.
Michael Page International Plc (MPI) lost 4 percent to 450.2 pence. The U.K. recruitment company said the three months through September will be “another challenging quarter” after first-half gross profit fell 4.4 percent.
Schindler Holding AG (SCHP) slid 5.2 percent to 136 francs, the biggest decline in almost two years, after the Swiss elevator maker cut its profit forecast.
Schindler projected net income of about 550 million francs ($589 million) to 600 million francs this year, including a 155 million-franc charge on its investment in Hyundai Elevator Co. That compares with an earlier forecast of as much as 790 million francs.
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