Bloomberg News

European Stocks Climb for Fourth Day; U.S. Manufacturing Expands

September 01, 2011

Sept. 1 (Bloomberg) -- European stocks rallied for a fourth day, the longest stretch of gains in more than month, after a report showed U.S. manufacturing unexpectedly expanded in August, boosting optimism in the world’s largest economy.

Royal Bank of Scotland Plc soared 8.2 percent following a report that U.K. lawmakers may delay a regulatory overhaul of lenders. Nokia Oyj gained 5.2 percent as Mosaid Technologies Inc. bought a portfolio of patents from the biggest mobile phone maker by volume.

The Stoxx Europe 600 Index advanced 0.6 percent to 238.93 at the 4:30 p.m. close in London, extending the previous day’s 2.9 percent gain. The benchmark measure declined 11 percent in August, its largest monthly retreat since October 2008.

“The data wasn’t as bad as feared and back into expansionary territory,” said Ioan Smith, a director at Knight Capital Europe Ltd. in London. “We got the instant positive reaction in the market that you would expect, but this reflects little change to the anemic pace of growth in manufacturing.”

Benchmark indexes climbed in 14 out of the 18 western European markets. The U.K.’s FTSE 100 Index rose 0.5 percent and France’s CAC 40 Index gained 0.3 percent. Germany’s DAX Index slid 0.9 percent.

A report showed that U.S. manufacturing unexpectedly expanded in August. Economists had predicted that the gauge would fall for the first time in two years.

U.S. Manufacturing Climbs

The Institute for Supply Management’s manufacturing index slipped to 50.6 last month from 50.9 in July, less than the plunge to 48.5 that 80 economists surveyed by Bloomberg News had predicted. The dividing line between expansion and contraction is 50, a level that the gauge last fell below in July 2009.

A Labor Department report showed that initial jobless claims in the week ending Aug. 26 slid to 409,000.

Spain sold 3.62 billion euros ($5.2 billion) of five-year bonds. Demand fell at the Spanish sale, with investors bidding for 1.76 times the amount of debt on offer, compared with a so- called bid-to-cover of 2.85 times at an offering of similar- maturity securities in July.

British banks rose after the Financial Times reported that the U.K. government will probably delay a regulatory overhaul until after the next general election to avoid tighter credit policies affecting the economy. RBS surged 8.2 percent to 26.25 pence, Barclays Plc jumped 5.6 percent to 180.35 pence and Lloyds Banking Group Plc rallied 6.2 percent to 35.67 pence.

Nokia rose 5.2 percent to 4.73 euros as Canada’s Mosaid Technologies acquired a portfolio of about 2,000 patents and patent applications originally filed by Nokia for an undisclosed sum. Deutsche Telekom climbed 3 percent to 9.07 euros after tumbling more than 7 percent yesterday.

Iliad, Charter International

Iliad SA gained 2.4 percent to 85.54 euros after confirming its short- and medium-term forecasts. The broadband provider setting up France’s fourth mobile-phone network also posted first-half net income of 145 million euros, beating the average analyst estimate of 134 million euros.

Charter International Plc jumped 4.7 percent to 799 pence after the British engineering group said that Melrose Plc sweetened its proposal by 10 pence to 850 pence a share.

“The board of Charter will give consideration to whether it should recommend to shareholders the terms proposed by Melrose as set out above, should Melrose notify Charter of a firm intention to make an offer on these terms,” Charter said in the statement.

Lagardere, Temenos

Lagardere SCA tumbled 11 percent to 21.16 euros after France’s biggest publisher predicted that recurring media earnings for the year will drop 5 to 7 percent. The owner of the Europe 1 radio station posted a 41 percent decline in first-half profit. Net income adjusted for some items dropped to 57 million euros from 97 million euros a year earlier, the Paris-based company said yesterday in a statement after the market closed.

Temenos Group AG retreated 4.5 percent to 16.95 Swiss francs after Deutsche Bank AG recommended selling the Swiss financial software provider’s shares.

Eiffage SA slumped 18 percent to 27.94 euros, the largest slide on the Stoxx 600, after posting first-half net income of 43 million euros, compared with 70 million euros a year earlier.

--With assistance from Sarah Jones in London. Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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


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