Sept. 3 (Bloomberg) -- European stocks rose for a second week as U.S. consumer spending gained, business activity and factory orders topped forecasts and Federal Reserve minutes showed some policy makers wanted to add to stimulus measures.
The market pared its weekly gain yesterday as data showing no growth in U.S. jobs spurred concern the world’s largest economy won’t help offset weakness caused by Europe’s sovereign- debt crisis. Hargreaves Lansdown Plc rose the most this week in the Stoxx Europe 600 Index, soaring 24 percent, after profit increased. Bouygues SA surged 15 percent after announcing a stock buyback and raising its full-year sales forecast. Eiffage SA sank 13 percent after earnings missed estimates.
The Stoxx 600 climbed 3.4 percent this week, the most in two months, after slumping 2.4 percent yesterday. The gauge still posted the biggest monthly decline since October 2008 in August, falling 10 percent, amid concern the economic recovery is weakening. The retreat has left the Stoxx 600 trading at 9.7 percent the estimated earnings of its constituent companies, near the lowest valuation since March 2009.
“European equities look very cheap compared with bonds and one must make extremely negative assumptions to arrive at a different conclusion,” said Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GmbH, which oversees about $22 billion. “Regarding macro-economic data, we’re seeing a discrepancy between the hard data that looks encouraging and soft data, based on surveys, that is disappointing. The question is which one is right? One important thing in the coming weeks will be to see whether sentiment-based indicators are improving.”
U.S. Consumer Spending
A report on Aug. 29 showed that U.S. consumer spending climbed more than forecast in July. Purchases rose 0.8 percent, their biggest gain since February, according to Commerce Department figures. They declined 0.1 percent in June. The median estimate of 74 economists surveyed by Bloomberg News called for a 0.5 percent increase. Separate reports on Aug. 31 showed that U.S. business activity and factory orders expanded more than economists had forecast.
Fed policy makers debated ways to invigorate the recovery and hiring at the last meeting of the Federal Open Market Committee, according to minutes released on Aug. 25. That potentially lays the groundwork for action at the FOMC’s Sept. 21 gathering. A few members of the Federal Open Market Committee favored a “more substantial move” at the Aug. 9 meeting beyond the pledge adopted by the panel to hold interest rates at record lows for the next two years.
U.S. Jobs, Unemployment
The Stoxx 600 pared some of its weekly advance after a report showed that the U.S. economy added no jobs in August and the unemployment rate held at 9.1 percent. Payrolls were unchanged last month, their weakest reading since September 2010, after an 85,000 gain in July that was less than initially estimated, according to a Labor Department release. The median forecast in a Bloomberg News survey called for an increase of 68,000 in August.
European sovereign default risk rose to a record after the report, which added to signs the global economic recovery is weakening. The Markit iTraxx SovX Western Europe Index of credit-default swaps insuring the debt of 15 governments rose 11 basis points to 310, surpassing an all-time high closing price of 308 on Aug. 26. Swaps tied to Italian debt jumped 15 basis points to 400, topping last month’s record closing price of 391, according to CMA.
National benchmark indexes gained in all of the 18 western European markets. France’s CAC 40 Index rose 2 percent, the U.K.’s FTSE 100 Index added 3.1 percent and Germany’s DAX Index advanced less than 0.1 percent. Greece’s ASE Index rose 1.3 percent, its first weekly gain in six weeks.
Hargreaves Lansdown Jumps
Hargreaves Lansdown surged 24 percent after the U.K.’s biggest retail broker said full-year net income in the year ended July 31 jumped 50 percent to 91.8 million pounds ($149 million) from 61.3 million pounds a year earlier as revenue increased 31 percent to 207.9 million pounds.
Bouygues, the French construction company that also runs telecommunications and media units, gained 15 percent after saying it will buy back 1.25 billion euros ($1.8 billion) of stock at 30 euros a share. The company also lifted its 2011 revenue target to 32 billion euros after reporting second- quarter sales that beat estimates.
Eiffage, a French construction company, plummeted 13 percent after saying net income plunged by 54 percent to 43 million euros.
BHP Billiton, Rio
BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest mining companies, followed gains in commodity stocks, both rising more than 3.5 percent. The sector was the best performing this week, surging 5.3 percent.
ProSiebenSat.1 Media AG soared 13 percent as Germany’s biggest private broadcaster said it will repurchase up to 2.5 million non-voting, preferred shares.
Alpha Bank SA, National Bank of Greece SA and Piraeus Bank SA all rose more than 3 percent, while EFG Eurobank Ergasias SA sank 18 percent. Alpha Bank said on Aug. 29 it will acquire Eurobank to create Greece’s biggest lender. The combined company, to be known as Alpha Eurobank, will increase capital by 3.9 billion euros to strengthen its finances, including a 1.25 billion-euro rights offer, a 500 million-euro convertible note to be taken up by Qatari-backed Paramount Services Holding Ltd. and 2.1 billion euros of internal measures.
Lagardere SCA tumbled 11 percent 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.
--Editors: Will Hadfield, Nick Baker
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