European stocks advance for second week
Sunday, 20 September 2009
LONDON, Sept 19 (Bloomberg): European stocks advanced for a second week, with the Dow Jones Stoxx 600 Index extending a six- month rally, as economic reports spurred speculation that company earnings will improve amid a global recovery.
Allied Irish Banks Plc soared 28 per cent after saying it will sell property loans to the country's so-called bad bank and raise about 2 billion euros ($2.9 billion) in capital. Danisco A/S jumped 19 per cent as the Nordic region's biggest food- ingredient maker reported first-quarter earnings that topped estimates and raised its full-year forecasts.
The Stoxx 600 added 1.3 per cent to 244.92, as 15 out of 19 industry groups advanced. A 55 per cent rally since March 9 has pushed the regional gauge to an 11-month high as results at companies from Goldman Sachs Group Inc. to Roche Holding AG surpassed projections and the German and French economies unexpectedly exited recessions.
"We have confidence in top-line growth coming through because we've seen the macro economic data tell us there is actually growth in these economies now," said Nick Nelson, a European equity strategist at UBS AG in London. "Corporate profits are providing you with the reason to get more constructive on stocks."
Earnings for companies in the Stoxx 600 are forecast to rise 4.3 per cent this year and 29 per cent in 2010, according to weekly data compiled by Bloomberg.
Reports this week showed the number of Americans filing first-time claims for jobless benefits fell unexpectedly last week, while builders in the US broke ground in August on the most houses in nine months and manufacturing in the Philadelphia region expanded in September for a second month.
Fed Chairman Ben S. Bernanke said Sept. 15 that the worst US recession since the 1930s has probably ended, while warning that growth may not be strong enough to quickly reduce the unemployment rate.
Berkshire Hathaway Inc. Chairman Warren Buffett said at a conference in California this week that his company is buying equities, while billionaire investor Kenneth Fisher said in an interview that global stocks are in the middle of a "V-shaped recovery," led by emerging markets, that will last for at least another six months.
National benchmark indexes advanced in all 18 western European markets except Iceland. The U.K.'s FTSE 100 rallied 3.2 per cent and Germany's DAX added 1.4 per cent. France's CAC 40 increased 2.5 per cent.
Ireland's ISEQ Index rallied 6.1 per cent, led by Allied Irish and Bank of Ireland Plc. Ireland's National Asset Management Agency will buy loans with a combined book value of 40 billion euros from the two banks as the government seeks to purge them of souring assets. Allied Irish said it may tap new and existing investors for capital as well as selling some assets to raise the 2 billion euros. Bank of Ireland shares climbed 20 per cent.
Sept. 15 saw the one-year anniversary of Lehman Brothers Holdings Inc.'s bankruptcy filing, which exacerbated the credit crunch and helped drag the global economy into its worst slowdown since World War II. Losses at the world's biggest financial institutions since the start of 2007 have widened to more than $1.6 trillion.
Danisco raised its net-income forecast for the 12 months ending April 30 to "slightly above" 700 million kroner ($138 million) from 650 million kroner previously, and said cost plans are starting to work.
Construction and material stocks got a boost this week after Exane BNP Paribas raised its recommendation on the industry to "outperform" from "neutral" and Goldman Sachs lifted its stance on European builders to "neutral" from "cautious."
CRH Plc, the world's second-largest maker and distributor of building materials, rallied 12 per cent, while Greece's Titan Cement Co. climbed 8.2 per cent. Lafarge SA, the biggest cement maker, advanced 6.6 per cent.
This month's $16 billion bid from Kraft Foods Inc. for Cadbury Plc may signal a pickup in mergers and acquisitions activity, following the slowest August for Europe's takeover market in five years. In the first half, M&A activity fell 42 per cent in the US, 50 per cent in Asia and almost 60 per cent in Europe as the credit crisis choked off financing.
Super de Boer NV, the Dutch food retailer controlled by France's Casino Guichard-Perrachon SA, surged 36 per cent after receiving an offer from rival Jumbo Groep Holding BV that values the company at about 482 million euros.
Enterprise Inns Plc slumped 14 per cent, posting the steepest decline among all the Stoxx 600 constituents. The U.K.'s second-largest pub owner is "likely" to seek to raise 500 million pounds ($813 million) selling shares to ease its debt burden, according to Seymour Pierce analysts.
Allied Irish Banks Plc soared 28 per cent after saying it will sell property loans to the country's so-called bad bank and raise about 2 billion euros ($2.9 billion) in capital. Danisco A/S jumped 19 per cent as the Nordic region's biggest food- ingredient maker reported first-quarter earnings that topped estimates and raised its full-year forecasts.
The Stoxx 600 added 1.3 per cent to 244.92, as 15 out of 19 industry groups advanced. A 55 per cent rally since March 9 has pushed the regional gauge to an 11-month high as results at companies from Goldman Sachs Group Inc. to Roche Holding AG surpassed projections and the German and French economies unexpectedly exited recessions.
"We have confidence in top-line growth coming through because we've seen the macro economic data tell us there is actually growth in these economies now," said Nick Nelson, a European equity strategist at UBS AG in London. "Corporate profits are providing you with the reason to get more constructive on stocks."
Earnings for companies in the Stoxx 600 are forecast to rise 4.3 per cent this year and 29 per cent in 2010, according to weekly data compiled by Bloomberg.
Reports this week showed the number of Americans filing first-time claims for jobless benefits fell unexpectedly last week, while builders in the US broke ground in August on the most houses in nine months and manufacturing in the Philadelphia region expanded in September for a second month.
Fed Chairman Ben S. Bernanke said Sept. 15 that the worst US recession since the 1930s has probably ended, while warning that growth may not be strong enough to quickly reduce the unemployment rate.
Berkshire Hathaway Inc. Chairman Warren Buffett said at a conference in California this week that his company is buying equities, while billionaire investor Kenneth Fisher said in an interview that global stocks are in the middle of a "V-shaped recovery," led by emerging markets, that will last for at least another six months.
National benchmark indexes advanced in all 18 western European markets except Iceland. The U.K.'s FTSE 100 rallied 3.2 per cent and Germany's DAX added 1.4 per cent. France's CAC 40 increased 2.5 per cent.
Ireland's ISEQ Index rallied 6.1 per cent, led by Allied Irish and Bank of Ireland Plc. Ireland's National Asset Management Agency will buy loans with a combined book value of 40 billion euros from the two banks as the government seeks to purge them of souring assets. Allied Irish said it may tap new and existing investors for capital as well as selling some assets to raise the 2 billion euros. Bank of Ireland shares climbed 20 per cent.
Sept. 15 saw the one-year anniversary of Lehman Brothers Holdings Inc.'s bankruptcy filing, which exacerbated the credit crunch and helped drag the global economy into its worst slowdown since World War II. Losses at the world's biggest financial institutions since the start of 2007 have widened to more than $1.6 trillion.
Danisco raised its net-income forecast for the 12 months ending April 30 to "slightly above" 700 million kroner ($138 million) from 650 million kroner previously, and said cost plans are starting to work.
Construction and material stocks got a boost this week after Exane BNP Paribas raised its recommendation on the industry to "outperform" from "neutral" and Goldman Sachs lifted its stance on European builders to "neutral" from "cautious."
CRH Plc, the world's second-largest maker and distributor of building materials, rallied 12 per cent, while Greece's Titan Cement Co. climbed 8.2 per cent. Lafarge SA, the biggest cement maker, advanced 6.6 per cent.
This month's $16 billion bid from Kraft Foods Inc. for Cadbury Plc may signal a pickup in mergers and acquisitions activity, following the slowest August for Europe's takeover market in five years. In the first half, M&A activity fell 42 per cent in the US, 50 per cent in Asia and almost 60 per cent in Europe as the credit crisis choked off financing.
Super de Boer NV, the Dutch food retailer controlled by France's Casino Guichard-Perrachon SA, surged 36 per cent after receiving an offer from rival Jumbo Groep Holding BV that values the company at about 482 million euros.
Enterprise Inns Plc slumped 14 per cent, posting the steepest decline among all the Stoxx 600 constituents. The U.K.'s second-largest pub owner is "likely" to seek to raise 500 million pounds ($813 million) selling shares to ease its debt burden, according to Seymour Pierce analysts.