European stocks rally on Fed cut, UBS, Lloyds TSB, BHP rise
Thursday, 20 September 2007
LONDON, Sept 19 (Bloomberg): European stocks climbed the most in more than a year after the Federal Reserve lowered its benchmark lending rate by half a per centage point to keep the world's largest economy growing.
UBS AG, Deutsche Bank AG and Lloyds TSB Group Plc led an advance by financial shares in Europe. Total SA, the region's largest refiner, and mining company BHP Billiton Ltd. rose after crude oil traded above $82 a barrel and copper increased.
``It's a bit like the cavalry arriving, this time in helicopter gunships,'' said Daniel Broby, chief investment officer at Renaissance Investment Management in London, where he helps manage $4 billion. ``We had our strategy meeting yesterday and we were certainly saying that if rates were cut by this magnitude we would be playing the rally.''
Europe's Dow Jones Stoxx 600 Index added 2.5 per cent to 376.89 as of 2:26 p.m. in London, the biggest gain since May 23, 2006. The Stoxx 50 rallied 2.6 per cent, and the Euro Stoxx 50, a measure for the euro region, jumped 2.7 per cent.
The risk of owning European corporate bonds dropped to the lowest in two months today, according to traders of credit- default swaps. The dollar traded within a cent of an all-time low versus the euro and declined against the yen. US 10-year Treasury notes fell for a third day.
The half-point reduction in the federal funds rate to 4.75 per cent was larger than most economists surveyed by Bloomberg predicted. Policy makers said they based their decision on the ``potential'' for the sell-off in credit markets to hobble economic growth.
National benchmarks gained in all 18 western European markets. The U.K.'s FTSE 100 advanced 2.8 per cent. France's CAC 40 added 2.9 per cent. Germany's DAX rose 2.2 per cent.
UBS, Switzerland's largest bank, climbed 4.8 per cent to 65.15 francs. Deutsche Bank, Germany's largest lender, gained 4.5 per cent to 94.33 euros, and Lloyds TSB, the U.K.'s No. 1 provider of personal loans, advanced 4.2 per cent to 541.5 pence.
Paris-based Total increased 2.6 per cent to 58.21 euros. BP Plc, Europe's second-largest oil company, rose 2.5 per cent to 585.5 pence. Crude oil for October delivery added as much as 86 cents, or 1.1 per cent, to $82.37 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
BHP Billiton, the world's biggest mining company, gained 5.8 per cent to 1,619 pence. Rio Tinto Group, the third-largest, advanced 5.9 per cent to 3,950 pence.
Copper futures for December delivery jumped 12.9 cents, or 3.7 per cent, to $3.577 a pound at 9:07 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $3.5945, the highest since Aug. 3.
The Dow Jones Europe Stoxx Constructions & Materials Index, the worst-performing industry this quarter among the 18 groups in the Stoxx 600, advanced 3.1 per cent. The benchmark for European builders has tumbled 12 per cent this quarter, heading for its biggest decline in five years.
``Sentiment toward the sector has collapsed,'' Mike Pinkney, an analyst at Citigroup in London wrote in a report published today. ``Perceptions have become detached from plausible reality.''
Ferrovial, the Spanish builder that spent $20 billion on the purchase of airport operator BAA Plc, rose 7.1 per cent to 59.95 euros. Hochtief, Germany's largest builder, gained 8.7 per cent to 78.98 euros.
Inditex SA climbed 4.6 per cent to 45 euros. Europe's largest clothing retailer increased second-quarter profit by 34 per cent to 193 million euros ($270 million), calculations based on first- half results released today by the Arteixo, Spain-based company show. That beat the 179 million-euro median of nine estimates in a Bloomberg survey.
Sogecable SA dropped 3.7 per cent to 24.55 euros. Spain's largest pay-television company denied Mediaproduccion SL's statement that the two companies declared a truce in their dispute over control of Spanish soccer television rights.
An alleged proposal to suspend the dispute made by Daniel Margalef, general manager of Sogecable's Audiovisual Sport unit, isn't valid, Sogecable said late yesterday.
Northern Rock Plc, the U.K. lender bailed out by the Bank of England, sank 5.4 per cent to 289.5 pence on speculation it may be bought for less than its current stock price.
Lloyds TSB may be working with UBS on a possible bid for at least some of Northern Rock, the Daily Telegraph said, without saying where it got the information.
Lloyds TSB spokeswoman Mary Walsh declined to comment.
Michael Page International Plc jumped 8.7 per cent to 418 pence after Goldman, Sachs & Co. added the U.K.'s second-largest recruitment company to its ``conviction buy'' list.
``Staffing stocks are discounting a materially weaker labor market than we currently expect,'' London-based analysts including Matthew Lloyd wrote in a report published today.
Absolute Capital Management Holdings Ltd. plummeted 48 per cent to 61.5 pence. The firm said it will stop clients from pulling money from eight hedge funds with $2.1 billion of assets after co-founder Florian Homm quit.
UBS AG, Deutsche Bank AG and Lloyds TSB Group Plc led an advance by financial shares in Europe. Total SA, the region's largest refiner, and mining company BHP Billiton Ltd. rose after crude oil traded above $82 a barrel and copper increased.
``It's a bit like the cavalry arriving, this time in helicopter gunships,'' said Daniel Broby, chief investment officer at Renaissance Investment Management in London, where he helps manage $4 billion. ``We had our strategy meeting yesterday and we were certainly saying that if rates were cut by this magnitude we would be playing the rally.''
Europe's Dow Jones Stoxx 600 Index added 2.5 per cent to 376.89 as of 2:26 p.m. in London, the biggest gain since May 23, 2006. The Stoxx 50 rallied 2.6 per cent, and the Euro Stoxx 50, a measure for the euro region, jumped 2.7 per cent.
The risk of owning European corporate bonds dropped to the lowest in two months today, according to traders of credit- default swaps. The dollar traded within a cent of an all-time low versus the euro and declined against the yen. US 10-year Treasury notes fell for a third day.
The half-point reduction in the federal funds rate to 4.75 per cent was larger than most economists surveyed by Bloomberg predicted. Policy makers said they based their decision on the ``potential'' for the sell-off in credit markets to hobble economic growth.
National benchmarks gained in all 18 western European markets. The U.K.'s FTSE 100 advanced 2.8 per cent. France's CAC 40 added 2.9 per cent. Germany's DAX rose 2.2 per cent.
UBS, Switzerland's largest bank, climbed 4.8 per cent to 65.15 francs. Deutsche Bank, Germany's largest lender, gained 4.5 per cent to 94.33 euros, and Lloyds TSB, the U.K.'s No. 1 provider of personal loans, advanced 4.2 per cent to 541.5 pence.
Paris-based Total increased 2.6 per cent to 58.21 euros. BP Plc, Europe's second-largest oil company, rose 2.5 per cent to 585.5 pence. Crude oil for October delivery added as much as 86 cents, or 1.1 per cent, to $82.37 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
BHP Billiton, the world's biggest mining company, gained 5.8 per cent to 1,619 pence. Rio Tinto Group, the third-largest, advanced 5.9 per cent to 3,950 pence.
Copper futures for December delivery jumped 12.9 cents, or 3.7 per cent, to $3.577 a pound at 9:07 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $3.5945, the highest since Aug. 3.
The Dow Jones Europe Stoxx Constructions & Materials Index, the worst-performing industry this quarter among the 18 groups in the Stoxx 600, advanced 3.1 per cent. The benchmark for European builders has tumbled 12 per cent this quarter, heading for its biggest decline in five years.
``Sentiment toward the sector has collapsed,'' Mike Pinkney, an analyst at Citigroup in London wrote in a report published today. ``Perceptions have become detached from plausible reality.''
Ferrovial, the Spanish builder that spent $20 billion on the purchase of airport operator BAA Plc, rose 7.1 per cent to 59.95 euros. Hochtief, Germany's largest builder, gained 8.7 per cent to 78.98 euros.
Inditex SA climbed 4.6 per cent to 45 euros. Europe's largest clothing retailer increased second-quarter profit by 34 per cent to 193 million euros ($270 million), calculations based on first- half results released today by the Arteixo, Spain-based company show. That beat the 179 million-euro median of nine estimates in a Bloomberg survey.
Sogecable SA dropped 3.7 per cent to 24.55 euros. Spain's largest pay-television company denied Mediaproduccion SL's statement that the two companies declared a truce in their dispute over control of Spanish soccer television rights.
An alleged proposal to suspend the dispute made by Daniel Margalef, general manager of Sogecable's Audiovisual Sport unit, isn't valid, Sogecable said late yesterday.
Northern Rock Plc, the U.K. lender bailed out by the Bank of England, sank 5.4 per cent to 289.5 pence on speculation it may be bought for less than its current stock price.
Lloyds TSB may be working with UBS on a possible bid for at least some of Northern Rock, the Daily Telegraph said, without saying where it got the information.
Lloyds TSB spokeswoman Mary Walsh declined to comment.
Michael Page International Plc jumped 8.7 per cent to 418 pence after Goldman, Sachs & Co. added the U.K.'s second-largest recruitment company to its ``conviction buy'' list.
``Staffing stocks are discounting a materially weaker labor market than we currently expect,'' London-based analysts including Matthew Lloyd wrote in a report published today.
Absolute Capital Management Holdings Ltd. plummeted 48 per cent to 61.5 pence. The firm said it will stop clients from pulling money from eight hedge funds with $2.1 billion of assets after co-founder Florian Homm quit.