European Stocks Rise As Investors Await Bernanke’s Speech
European stocks advanced, with the Stoxx Europe 600 Index heading for a third consecutive monthly gain, as investors awaited a speech by Federal Reserve Chairman Ben S. Bernanke.
Hermes International SCA (RMS) gained 1.3 percent after the maker of Birkin and Kelly bags raised this year’s sales-growth target as first-half earnings beat estimates. Bankia SA climbed 3.7 percent as Spain was said to be considering recapitalizing the country’s largest nationalized lender with its own money.
The Stoxx 600 added 0.7 percent to 266.79 at 1:02 p.m. in London. European shares are still heading toward a 0.5 percent drop this week amid signs that global economic growth is slowing and as the Spanish region of Catalonia asked for a bailout from the central government.
“The market is showing classic signs of a wait-and-see position, which isn’t unusual after a strong rally and ahead of the various central bank meetings and European policy decisions,” Gillian Hollenstein, chief investment officer at Labha Investment Advisors SA in Zurich, which oversees about 100 million Swiss francs ($105 million), said in a telephone interview. “Investors have toned down their expectations so that even if Bernanke simply reiterates that he’s willing and able to move if necessary, it should be good enough for the markets. There’s no reason for Bernanke to act yet, and the market does realize that.”
The Stoxx 600 declined yesterday as data from Japan to Germany added to evidence that global growth is slowing while speculation cooled that Bernanke will announce more stimulus. The gauge is still poised to post a monthly advance of 2.1 percent.
Bernanke Speech
Bernanke will deliver his annual speech on monetary policy at the central bank’s symposium in Jackson Hole, Wyoming, at 10 a.m. New York time today. His address in 2010 preceded a second round of quantitative easing to support growth.
A Commerce Department report at the same time may show that U.S. factory orders jumped 2 percent in July from a 0.5 percent drop the previous month, according to the median forecast of 60 economists in a Bloomberg News survey.
Euro-area unemployment reached the highest on record in July, the European Union’s statistics office in Luxembourg said today. The jobless rate in the economy of the 17 nations using the euro was 11.3 percent, the same as in June after that month’s figure was revised higher. That’s the highest since the data series started in 1995.
‘Sector Rotation’
“No one is willing to take either very positive or negative positions at the moment,” Hollenstein said. “But we do see some sector rotation, with more relative strength in cyclical stocks versus the defensives. We might see this move developing more strongly over the next weeks.”
National benchmark indexes advanced in every western- European market today, except for Iceland. The U.K.’s FTSE 100 Index increased 0.5 percent, while France’s CAC 40 Index rose 1.3 percent. Germany’s DAX Index climbed 1.3 percent.
Hermes increased 1.3 percent to 226.55 euros as it said annual sales growth excluding currency shifts “could be around 12 percent.” The company last month said it targeted annual revenue growth of 10 percent.
Operating income climbed to 510.9 million euros ($640 million) from 418.1 million euros a year ago, beating the average 502 million-euro analyst estimate. Net income rose 15 percent to 335.1 million euros, beating the 320.7 million euro average of three analyst estimates compiled by Bloomberg.
Bankia Recapitalization
Bankia (BKIA) climbed 3.7 percent to 1.39 euros. Spain is considering recapitalizing the country’s largest nationalized lender with its own money instead of using the emergency portion of a 100 billion-euro bailout from the European Union, according to two people with direct knowledge of the matter.
This would allow Spain to put off forcing Bankia group’s junior debt holders to bear part of the rescue cost, said the people, who asked not to be identified because the negotiations are private. European officials backed burden sharing in the talks because it would limit the need for public money, the people said.
A gauge of European lenders was the best performer of the 19 industry groups on the Stoxx 600, with Banca Monte dei Paschi dei Siena SpA surging 6.9 percent to 22.5 euro cents, and Banco Santander SA (SAN) rising 2.5 percent to 5.48 euros. Credit Agricole SA (ACA) increased 5.7 percent to 4.56 euros.
Miners Advance
Rio Tinto Group (RIO) and Anglo American Plc (AAL) added 1.6 percent to 2,757.5 pence, and 2 percent to 1,789 pence, respectively, as a gauge of European mining shares rebounded from yesterday’s loss, posting the second-best group performance on the Stoxx 600. Glencore International Plc (GLEN) gained 3.3 percent to 369.3 pence and Xstrata Plc (XTA) rose 3.3 percent to 930.6 pence.
Iliad SA (ILD), the mobile-phone company that shook the French market with 2 euro-a-month packages, jumped 4.4 percent to 126 euros, the highest price since at least 2004, as it reported sales and profit that beat analyst projections after grabbing 3.6 million subscribers in the first six months of its venture into wireless services.
Neste Oil Oyj (NES1V), Finland’s only oil refiner, rallied 5.4 percent to 9.30 euros after Goldman Sachs Group Inc. raised the stock to buy from sell.
Lagardere SCA (MMB), France’s largest publishing company, jumped 5.3 percent to 22.73 euros after Credit Suisse Group AG said there are “strong reasons” to purchase the stock. Lagardere late yesterday reiterated its recurring earnings before interest and taxes target.
Aeroports De Paris (ADP), the operator of the Charles de Gaulle and Orly airports, fell 3.2 percent to 62.55 euros as first-half net income dropped 18 percent to 147 million euros. Kepler Capital Markets cut the stock to reduce, the equivalent of sell, from hold.
Source: Bloomberg
