Bloomberg News

European Stocks Are Little Changed; Banco Espirito Santo Rallies

December 28, 2011

Dec. 27 (Bloomberg) -- European stocks closed little changed after data on U.S. house prices and consumer confidence gave conflicting signals about the strength of the world’s largest economy.

Banco Comercial Portugues SA and Banco Espirito Santo SA rallied more than 7 percent after a report that Portugal may recapitalize its banks without taking an equity stake. Chemical makers also advanced. Italian lenders UniCredit SpA and Mediobanca SpA retreated at least 4 percent.

The benchmark Stoxx Europe 600 Index rose less than 0.1 percent to 241.91 at the close of trading, having fluctuated between gains and losses at least 10 times. The measure rallied 3.5 percent last week as a decline in U.S. jobless claims and increases in consumer confidence and durable-goods orders spurred optimism that the economy is strengthening. The gauge has still retreated 12 percent this year as Europe’s debt crisis spread from Greece to Italy and Spain.

“After the Christmas holidays, market participants are focused on the consumer-confidence index and Case-Shiller,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. “The unemployment data in the next days are more important for the market because it shows how strong the U.S. economy really is.”

Reduced Volume

The volume of share trading across Europe was reduced today as U.K. and Irish markets remained closed for a second day following the Christmas holiday. The number of Euro Stoxx 50 Index futures that have changed hands was less than 20 percent of the average over the past 20 days, according to data compiled by Bloomberg.

The Standard & Poor’s/Case-Shiller index of property values in 20 U.S. cities dropped 3.4 percent from October 2010 after decreasing 3.5 percent in the year ended September, the New York-based group said today. The median forecast of 27 economists in a Bloomberg survey was for a 3.2 percent decrease.

Confidence among U.S. consumers rose as an improving job market helped regain all the ground lost following the mid-year government budget battle and credit-rating downgrade. The Conference Board’s index increased to 64.5 this month, exceeding all estimates in a Bloomberg News survey, from a revised 55.2 reading in November, figures from the New York-based private research group showed. The measure averaged 53.7 during the recession that ended in June 2009.

Stock swings that reached twice the five-decade average left the S&P 500 Index with the smallest price change in 41 years and utilities, soapmakers and health-care providers at the highest valuations since 2008. The S&P 500 rose 3.7 percent last week, sending the measure to a gain of 0.6 percent for the year. The last time it moved less on an annual basis was in 1970, when it fell 0.1 percent.

German Economy

Germany’s economy is robust enough to withstand a more difficult European and global business environment, Handelsblatt cited Economy Minister Philipp Roesler as saying in an interview. Private consumption is sustaining growth and businesses are strong enough to be optimistic about the future, the German newspaper cited Roesler as saying.

National benchmark indexes gained in 10 of the 16 western European markets trading today. Germany’s DAX advanced 0.2 percent while France’s CAC 40 added less than 0.1 percent . The Swiss Market Index fell 0.1 percent.

Banco Comercial Portugues rallied 7.7 percent to 13 euro cents and Banco Espirito Santo surged 14 percent to 1.34 euros. Portugal may recapitalize its banks without becoming a shareholder, Jornal de Negocios reported, without saying where it got the information.

The government may subscribe contingent convertible bonds sold by the banks, the newspaper said. So-called CoCos are bonds that convert into equity if a bank’s capital drops below a set level.

Wacker, Symrise

Wacker Chemie AG and Symrise AG led chemical makers higher. The German companies added 0.9 percent to 61.33 euros and 2.4 percent to 20.27 euros, respectively.

UniCredit and Mediobanca lost 4.8 percent to 6.58 euros and 4.8 percent to 4.53 euros, respectively, in Milan trading. Intesa Sanpaolo SpA tumbled 2.4 percent to 1.28 euros.

Italy plans to sell almost 450 billion euros of debt next year to pay for maturing bonds and bills and cover the government’s budget deficit, Il Sole 24-Ore said, citing an interview with Maria Cannata, director of public debt.

Sky Deutschland AG declined 1.8 percent to 1.39 euros. The company won’t show Paramount Pictures Corp.’s movies in 2012, and the change will damp enthusiasm for its movie channel, according to Financial Times Deutschland. Paramount’s films include “Mission Impossible,” “TinTin” and “Titanic.”

--With assistance from Tom Stoukas in Toronto. Editor: Andrew Rummer

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

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


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