Bloomberg News

European Stocks Rise to Two-Month High; Alpha Bank, ASML Climb

October 12, 2011

Oct. 12 (Bloomberg) -- European stocks climbed to a two- month high as the European Commission’s Olli Rehn said the debt crisis can be resolved, outweighing earnings from Alcoa Inc. that missed estimates.

Greek banks rallied, with Alpha Bank SA and National Bank of Greece SA soaring at least 15 percent. Burberry Group Plc, the U.K.’s largest luxury-goods maker, climbed 3.5 percent as sales topped forecasts. ASML Holding NV added 6.3 percent after Europe’s biggest semiconductor-equipment maker reported income that beat projections. YIT Oyj, Finland’s largest builder, slid 4.1 percent after cutting its profit outlook.

The Stoxx Europe 600 Index rose 1.7 percent to 239.16 at the close of trading, the highest since Aug. 4. The measure has rallied 10 percent since Oct. 4 for the biggest six-day gain since January 2009. The gauge has still tumbled 18 percent from its high on Feb. 17 amid concern that the sovereign debt crisis in Europe will spread from Greece to the larger economies of Italy and Spain.

“Equity markets are still giving euro-zone leaders the benefit of the doubt in their efforts to stem the crisis,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, wrote in an e-mail. “A greater sense of urgency should not be mistaken for measures to tackle the sovereign debt crisis head-on.”

National benchmark indexes climbed in all of the 18 western-European markets, except Iceland. Germany’s DAX advanced 2.2 percent and France’s CAC 40 increased 2.4 percent. The U.K.’s FTSE 100 gained 0.9 percent to a two-month high.

Coordinated Action

Rehn, the EU’s Economic and Monetary Affairs Commissioner, said in a prerecorded speech to a Dublin conference that the euro area is approaching a consensus on resolving the debt crisis. He said economic growth is stalling and Europe is in “a very dangerous place,” though the region can avert “calamity” by coordinating action, increasing banks’ capital and enhancing growth.

The Stoxx 600 earlier fell as much as 1 percent as political wrangling in Slovakia delayed the ratification of the euro area’s overhauled bailout fund. Slovak parties reached an agreement to approve the European Financial Stability Facility today after failing to pass the package yesterday. Foreign Minister Mikulas Dzurinda said lawmakers may vote again on the measures tomorrow.

Alcoa Earnings

Alcoa, the first company in the Dow Jones Industrial Average to report earnings this quarter, posted profit that trailed estimates, saying European customers “dramatically” cut orders because of economic uncertainty. The U.S. aluminum producer reported income in the third quarter excluding restructuring costs and tax benefits of 14 cents a share, missing the average estimate of 22 cents in a Bloomberg survey.

European industrial production unexpectedly rose for a second month in August as increasing output in countries from France to Portugal and Italy offset a slump in Germany.

Production in the 17-nation euro area advanced 1.2 percent from July, when it rose 1.1 percent, the EU’s statistics office said today. That’s the biggest gain since November 2010. Economists had forecast a drop of 0.8 percent, the median of 32 estimates in a Bloomberg survey showed.

Alpha Bank and National Bank of Greece soared 18 percent to 98 euro cents and 15 percent to 1.84 euros, respectively. Piraeus Bank SA rallied 14 percent to 29 euro cents.

Barclays Plc jumped 6.4 percent to 187 pence. Societe Generale SA and BNP Paribas SA, France’s biggest banks, added 6 percent to 23.16 euros and 5.7 percent to 35.35 euros.

‘Piecemeal Responses’

European Commission President Jose Barroso called for a reinforcement of crisis-hit banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund to master Europe’s debt woes.

“Reactive and piecemeal responses to different aspects of the crisis are no longer sufficient,” Barroso said in Brussels. “We now need to get ahead of the curve.”

Burberry gained 3.5 percent to 1,308 pence after reporting fiscal second-quarter sales that beat analysts’ estimates and dispelled concern that demand has slowed with plans to add 15 percent to its average retail space.

Revenue in the three months ended Sept. 30 rose to 463 million pounds ($729 million) from 382 million pounds a year earlier, the London-based company said. The average of 11 estimates compiled by Bloomberg was 447.8 million pounds.

ASML increased 6.3 percent to 28.20 euros after reporting third-quarter net income of 355 million euros ($489 million), topping the average estimate of 323 million euros in a Bloomberg survey of 16 analysts.

Carmakers, Chemicals Gain

Michelin & Cie., the world’s second-largest tiremaker, gained 5.6 percent to 49.18 euros as a gauge of auto stocks posted the best performance of the 19 industry groups in the Stoxx 600. Fiat SpA, Italy’s biggest automaker, jumped 7.8 percent to 4.92 euros and Germany’s Daimler AG surged 5.6 percent to 37.85 euros.

Clariant AG and Yara International ASA led a rally in chemical stocks, climbing 6.4 percent to 9.76 Swiss francs and 4.8 percent to 247 kroner, respectively. K+S AG, Europe’s biggest potash producer, added 3.9 percent to 43.80 euros.

A.P. Moeller-Maersk A/S rose 4.2 percent to 35,320 kroner as the world’s biggest container-shipping line said it agreed to sell its Maersk LNG A/S unit to Teekay LNG Operating LLC and Marubeni Corp. for $1.4 billion.

YIT plunged 4.1 percent to 12.49 euros. The company cut its full-year outlook for operating profit after making a 10 million-euro provision in the third quarter for an ammonia problem at its flats in St. Petersburg.

Man Group Plc, the world’s largest hedge fund manager, sank 6 percent to 155.30 pence after reporting that the net-asset value of its AHL Diversified fund fell 5.5 percent in the week through Oct. 10.

--Editors: Andrew Rummer, Will Hadfield

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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


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