Bloomberg News

European Stocks Gain for a Seventh Day; Celesio Rises, CSM Falls

July 05, 2011

July 5 (Bloomberg) -- European stocks advanced, as the Stoxx Europe 600 Index rallied for a seventh day, before a U.S. report that may show factory orders rebounded in May. Asian shares fell and U.S. index futures were little changed.

Celesio AG, Europe’s biggest drug wholesaler, surged 5 percent after analysts raised their recommendation on the stock. CSM NV slumped more than 9 percent, its largest drop in 2 1/2 years, after saying first-half earnings will decline because of higher raw-material costs.

The Stoxx 600 climbed 0.3 percent to 276.44 at 11:19 a.m. in London as the benchmark measure had its longest winning streak in two months. The index surged 4.4 percent over the past six trading days after Greek lawmakers passed a five-year austerity package, qualifying the country for further aid. The measure still slipped 1.1 percent in the second quarter on concern that Greece will fail to repay all its debt.

“The situation in Greece was rotting the environment for stocks,” said Bruno Ducros, a fund manager at CamGestion in Paris, which oversees about $3.6 billion in stocks. “But we can have a better second half. There are better macro elements and growth that is a bit stronger in the U.S.”

U.S. manufacturing unexpectedly accelerated in June, according to a gauge of the industry last week, supporting the Federal Reserve’s forecast that the economy will strengthen in the second half of 2011. A Commerce Department report today is projected to show that orders placed with factories rebounded 1 percent in May after falling in April by the most in almost a year.

S&P 500 Futures

Futures on the Standard & Poor’s 500 Index advanced 0.2 percent, while the MSCI Asia Pacific Index dropped 0.2 percent. Exchanges in the U.S. were closed for the Independence Day holiday yesterday.

Asian shares retreated as Moody’s Investors Service said that Chinese banks have lent about 3.5 trillion yuan ($541 billion) to local governments more than the national auditor had estimated. The credit outlook for the industry might decline, Moody’s said.

“The Chinese audit agency could be understating banks’ exposure to local governments,” Yvonne Zhang, a vice president at Moody’s, said in the report. The “apparent absence of a clear master plan to deal with this issue” may exacerbate problems and the state might leave lenders to manage part of the souring loans on their own, it said.

Greek Debt Rollover

Standard & Poor’s and Fitch Ratings may enable European Central Bank President Jean-Claude Trichet to support a private investor rollover of Greek debt by saying a default rating would be partial and temporary.

Trichet put Greece’s fate in the hands of ratings companies when bank officials began saying in May that the ECB, which has lent 98 billion euros ($142 billion) to Greek banks, would refuse to accept the nation’s bonds as collateral if any “burden sharing” by private investors produced a default rating.

Celesio climbed 5 percent to 14.75 euros, its largest gain in four months. The stock was raised to “outperform” from “underperform” at CA Cheuvreux and to “add” from “neutral” at WestLB AG.

CSM plunged 9.3 percent to 19.74 euros, extending yesterday’s 5.4 percent slump. The world’s largest maker of bakery ingredients said first-half earnings before interest, taxes and amortization and before one-off costs will drop to about 80 million euros, lower than last year’s first-half earnings because of the increased cost of raw materials.

Schroders Plc, the U.K.’s biggest publicly traded fund manager, advanced 1.3 percent to 1,616 pence. The shares were raised to “buy” from “neutral” at UBS AG.

PagesJaunes, Carrefour

PagesJaunes Groupe tumbled 8.6 percent to 5.64 euros. The directory company said it expects to miss its full-year revenue and gross operating margin forecast. Second-quarter orders fell short of its projections due to “social unrest” among its sales force in France.

Carrefour SA, the world’s second-largest retailer by sales, traded in Paris excluding the value of its Dia unit which will start trading in Madrid today. Carrefour stock traded at 23.94 euros.

Aixtron SE, a maker of equipment used to produce light- emitting-diode screens, sank 5.1 percent to 23.25 euros. HSBC Holdings Plc cut its price estimate for the shares to 33 euros from 38 euros and said that consensus estimates for the company’s second quarter are too high.

--Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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