Europe stocks rally, driving Stoxx 600 index to highest since October
Sunday, 23 August 2009
LONDON, Aug. 22 (Bloomberg): European stocks rose this week, sending the Dow Jones Stoxx 600 Index to its highest level since October, after Federal Reserve Chairman Ben S. Bernanke said the world is "beginning to emerge" from a recession and reports signaled an improving economy.
UBS AG rallied 8.8 per cent as the Swiss government sold its 6 billion-Swiss franc ($5.6 billion) investment in the bank. Wienerberger AG, the world's biggest brickmaker, surged 23 per cent after Deutsche Bank AG recommended buying the shares. Holcim Ltd. climbed 11 per cent as the cement maker raised its savings target for 2009.
The Stoxx 600 added 2.7 per cent to 234.85. Economic data this week showed that sales of existing US homes jumped more than forecast in July to the highest level in almost two years, while investor confidence in Germany climbed more than estimated last. German services and French manufacturing unexpectedly expanded in August, Markit Economics said, citing its purchasing managers' survey.
"The PMI data for the euro-zone are stunning," said Matthias Joerss, head of equity strategy at Sal. Oppenheim Jr. & Cie. in Frankfurt. "We should get very decent earnings reports for the third quarter."
The Stoxx 600 has rallied 49 per cent since March 9 as companies worldwide from Goldman Sachs Group Inc. to Bayer AG reported better-than-projected earnings and investors speculated government measures and interest-rate cuts will help to pull the global economy out of recession.
"After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good," Bernanke said in a speech at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming.
The Organization of Economic Cooperation and Development said Aug. 19 that the economies of its 30 members collectively stopped shrinking in the second quarter as Japan, France and Germany exited recession. Together, the countries had zero growth in the three months through June after contracting 2.1 per cent in the first quarter.
National benchmark indexes rose in all 18 western European markets this week. The U.K.'s FTSE 100 and Germany's DAX both climbed 2.9 per cent. France's CAC 40 advanced 3.5 per cent.
Net profits at companies in Europe that have reported quarterly results since July 8 beat projections by 18 per cent, according to data compiled by Bloomberg. Analysts expect earnings in the Stoxx 600 to grow 6 per cent this year, estimates compiled by Bloomberg show.
UBS soared 8.8 per cent as the government sold its stake in the country's largest bank by assets for 16.50 francs a share.
"The exit is a positive signal, as it shows the confidence of the Swiss government regarding the situation of UBS," Stefan Schuermann, an analyst at Bank Vontobel AG with a "hold" recommendation on the stock, wrote in a report to clients.
Wienerberger, which said this week it will extend factory closures and reduce output to lower costs, added 23 per cent, the biggest weekly increase since October. Deutsche Bank raised its recommendation to "buy" from "hold."
Holcim gained 11 per cent. The world's second-biggest cement maker lifted its 2009 savings target by 60 per cent after surpassing the previous full-year goal in the first half alone.
Hochtief AG advanced 14 per cent after Deutsche Bank analysts upgraded shares of Germany's biggest construction company to "buy" from "hold."
Construction and materials stocks rose 4.9 per cent as a group this week, the second-biggest gain among 19 industries in the Stoxx 600. A measure of utilities rallied 5.3 per cent.
UBS AG rallied 8.8 per cent as the Swiss government sold its 6 billion-Swiss franc ($5.6 billion) investment in the bank. Wienerberger AG, the world's biggest brickmaker, surged 23 per cent after Deutsche Bank AG recommended buying the shares. Holcim Ltd. climbed 11 per cent as the cement maker raised its savings target for 2009.
The Stoxx 600 added 2.7 per cent to 234.85. Economic data this week showed that sales of existing US homes jumped more than forecast in July to the highest level in almost two years, while investor confidence in Germany climbed more than estimated last. German services and French manufacturing unexpectedly expanded in August, Markit Economics said, citing its purchasing managers' survey.
"The PMI data for the euro-zone are stunning," said Matthias Joerss, head of equity strategy at Sal. Oppenheim Jr. & Cie. in Frankfurt. "We should get very decent earnings reports for the third quarter."
The Stoxx 600 has rallied 49 per cent since March 9 as companies worldwide from Goldman Sachs Group Inc. to Bayer AG reported better-than-projected earnings and investors speculated government measures and interest-rate cuts will help to pull the global economy out of recession.
"After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good," Bernanke said in a speech at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming.
The Organization of Economic Cooperation and Development said Aug. 19 that the economies of its 30 members collectively stopped shrinking in the second quarter as Japan, France and Germany exited recession. Together, the countries had zero growth in the three months through June after contracting 2.1 per cent in the first quarter.
National benchmark indexes rose in all 18 western European markets this week. The U.K.'s FTSE 100 and Germany's DAX both climbed 2.9 per cent. France's CAC 40 advanced 3.5 per cent.
Net profits at companies in Europe that have reported quarterly results since July 8 beat projections by 18 per cent, according to data compiled by Bloomberg. Analysts expect earnings in the Stoxx 600 to grow 6 per cent this year, estimates compiled by Bloomberg show.
UBS soared 8.8 per cent as the government sold its stake in the country's largest bank by assets for 16.50 francs a share.
"The exit is a positive signal, as it shows the confidence of the Swiss government regarding the situation of UBS," Stefan Schuermann, an analyst at Bank Vontobel AG with a "hold" recommendation on the stock, wrote in a report to clients.
Wienerberger, which said this week it will extend factory closures and reduce output to lower costs, added 23 per cent, the biggest weekly increase since October. Deutsche Bank raised its recommendation to "buy" from "hold."
Holcim gained 11 per cent. The world's second-biggest cement maker lifted its 2009 savings target by 60 per cent after surpassing the previous full-year goal in the first half alone.
Hochtief AG advanced 14 per cent after Deutsche Bank analysts upgraded shares of Germany's biggest construction company to "buy" from "hold."
Construction and materials stocks rose 4.9 per cent as a group this week, the second-biggest gain among 19 industries in the Stoxx 600. A measure of utilities rallied 5.3 per cent.