European Stocks Climb for Third Week; UniCredit, Arriva Gain
March 20, 2010, 10:48 AM EDTBy Daniela Silberstein
March 20 (Bloomberg) -- European stocks rose for a third straight week after Standard & Poor’s said it’s no longer planning an imminent downgrade of Greece’s debt and as the U.S. Federal Reserve repeated a pledge to maintain record-low borrowing costs for an extended period.
UniCredit SpA gained 4.7 percent after Italy’s biggest bank posted earnings that beat estimates. Lloyds Banking Group Plc rallied after saying it may be profitable this year. Arriva Plc jumped 24 percent after the operator of Britain’s longest rail route said it received a takeover approach.
The Stoxx Europe 600 Index gained 0.7 percent to 260.20, a third straight weekly advance. The measure retreated for the first two months of 2010 amid concern that Greece will struggle to rein in Europe’s biggest budget deficit.
“We were strongly caught in uncertainty over Greece, which hasn’t gone away but has brightened up,” said Rolf Biland, Zurich-based chief investment officer at VZ Vermoegenszentrum, which oversees about $5.7 billion. “Markets are reacting again to the state of the economy and debt concerns have moved to the background. In the short-term we may see the recovery continue.”
Greece had the threat of a cut to its credit rating reduced by S&P, which cited the country’s efforts to narrow a budget deficit that is more than four times the European Union’s 3 percent limit. S&P affirmed the nation’s BBB+ rating, removing it from “creditwatch negative,” meaning the company is no longer considering an imminent reduction to the grade.
Greek Cuts
Officials from the 16 countries using the euro this week worked out a strategy for emergency loans in case Greece’s plan for 4.8 billion euros ($6.6 billion) in tax increases and wage cuts fails to bring the deficit under control.
The acting Dutch Finance Minister Jan Kees de Jager said that the International Monetary Fund “will probably do part” of Greece’s financing needs. The European Union said that “all EU states” are determined to help Greece if needed.
The Stoxx 600 has surged 65 percent since March 9 last year as governments and central banks around the world maintained low interest rates and committed more than $12 trillion to stimulate the economy.
The Fed said low rates were still needed to drive the world’s largest economy. The U.S. central bank also said the labor market is stabilizing and business spending has risen, while inflation remains subdued.
Unicredit, Lloyds
National benchmark indexes rose in 12 out of 18 western European markets. The U.K.’s FTSE 100 rose 0.4 percent and Germany’s DAX advanced 0.6 percent, while France’s CAC 40 dropped 0.1 percent. Greece’s ASE Index slid 3.1 percent as the nation’s banks tumbled.
UniCredit gained 4.7 percent. The Italian bank posted a fourth-quarter net income of 371 million euros, beating the median analyst estimate in a Bloomberg survey for a loss of 26 million euros.
Lloyds advanced 2.8 percent. Britain’s biggest mortgage provider said trading has been “strong” in the first 10 weeks of 2010 and that it may be profitable this year while impairments will be better than previously forecast.
Arriva rallied 24 percent. Deutsche Bahn AG, Germany’s state rail company, confirmed its interest in the U.K. train and bus operator.
Chocolate Market
Bourbon SA jumped 17 percent. The owner of the second- biggest fleet of supply and crew ships for the oil industry forecast a recovery in offshore exploration and production.
Lindt & Spruengli AG climbed 6.3 percent. The chocolate maker’s 2009 profit fell 26 percent to 193.1 million Swiss francs ($182 million) as the chocolate market shrank for the first time in a decade. The company sees 8 to 10 percent growth in earnings before interest and taxes from 2011.
Inditex SA climbed 4.7 percent. The world’s biggest clothing retailer posted an 18 percent increase in fourth- quarter net income to 483 million euros as international sales helped offset sluggish Spanish consumer spending. That beat the average analyst forecast of 429.8 million euros in a Bloomberg survey.
DSG International Plc advanced 6.3 percent. The U.K.’s largest consumer-electronics retailer said its 200 million-pound cost-savings program is “on track.”
Close Brothers Group Plc advanced 11 percent. The British investment bank founded in 1878 said fiscal first-half profit almost doubled, boosted by higher demand for loans.
National Bank of Greece, the nation’s biggest lender, dropped 6.4 percent as the Finance Ministry said Greek banks that have participated in a 28 billion-euro government liquidity support plan won’t be allowed to pay a cash dividend on 2009 earnings.
--Editors: David Merritt, Jason Carey
To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.
To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.
