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Europe Stocks Rise as Investors Weigh U.S. Shutdown

European stocks advanced, after yesterday’s biggest decline in a month, as investors weighed the continuation of America’s government shutdown and data showing a gauge of China’s services industry rose to a six-month high. U.S. futures were also little changed, while Asian shares rose.

Aviva Plc advanced 1.5 percent as the insurer said it generated $2.6 billion from the sale of its U.S. business. BP Plc rose 1.7 percent after a U.S. appeals court ordered a reconsideration of key terms of a settlement in the 2010 Gulf of Mexico oil spill case. Unicredit SpA added 0.7 percent as it bid for Rabobank Groep’s Polish unit.

The Stoxx Europe 600 Index gained 0.3 percent to 311.6 at 8:13 a.m. in London. The equity benchmark yesterday fell 0.8 percent to the lowest level since Aug. 30. It has still rallied 11 percent this year as central banks around the world pledged to leave interest rates low for a prolonged period. Standard & Poor’s 500 Index futures declined 0.1 percent, while the MSCI Asia Pacific Index climbed 0.4 percent.

The volume of shares changing hands in Stoxx 600-listed companies was 37 percent higher than the 30-day average, data compiled by Bloomberg show. Volume on Germany’s benchmark DAX Index was 51 percent lower than the 30-day average because of a public holiday.

U.S. President Barack Obama and congressional leaders yesterday failed to break a budget impasse in their first face-to-face talks since the government began its first partial shutdown in 17 years on Oct. 1. The move has placed as many as 800,000 federal employees on unpaid leave, closed national parks, museums and Internal Revenue Service call centers.

Shutdown Cost

A partial shutdown lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists in a Bloomberg survey, with the costs accelerating if the closure persists.

The standoff raises concern the budget dispute may affect talks to increase the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted on Oct. 17. The U.S. won’t have enough money to pay all of its bills at some point between Oct. 22 and Oct. 31 without action by Congress, according to the Congressional Budget Office.

In China, the non-manufacturing purchasing managers’ index rose to 55.4 in September from 53.9 in August, the National Bureau of Statistics and Federation of Logistics and Purchasing said in Beijing. That’s the highest level since March. Readings above 50 signal expansion.

Aviva Sale

Aviva climbed 1.5 percent to 413.5 pence after saying the sale of its U.S. life-insurance and annuities business to Apollo Global Management LLC’s Athene Holding Ltd. generated proceeds of $2.6 billion, higher than the $1.8 billion purchase price disclosed in December. Earnings and other improvements in the U.S. company’s surplus increased the value, Aviva said in a statement.

BP advanced 1.7 percent to 439.7 pence as the U.S. Court of Appeals asked U.S. District Judge Carl Barbier to review his interpretation of some of the terms of a settlement the company reached with spill victims’ lawyers in 2012.

BP said the program’s administrator was approving millions of dollars in “fictitious” payments based on a flawed interpretation of the agreement. The appelate panel also asked Barbier to stop some payments until he can sort out who has legitimate claims.

Unicredit gained 0.7 percent to 5.13 euros as Italy’s biggest bank said it offered to buy Bank Gospodarki Zywnosciowej SA, in which Rabobank owns a 98 percent stake. The bid is at a preliminary stage, according to Unicredit Chief Executive Officer Federico Ghizzoni.

Source: Bloomberg

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