Bloomberg News

European Stocks Post Weekly Gain on U.S Economy; Faurecia Climbs

January 06, 2012

Dec. 24 (Bloomberg) -- European stocks rose this week as reports showing a decline in U.S. jobless claims and increases in consumer confidence and durable-goods orders spurred optimism that the world’s biggest economy is strengthening.

Faurecia SA, Europe’s largest maker of car interiors, and CRH Plc led gains in automobile and construction companies as stocks most sensitive to economic expansion climbed. Banks, this year’s worst-performing industry group, rebounded as the European Central Bank lent them a record amount to keep credit flowing to the economy. Credit Agricole SA and Intesa Sanpaolo SpA rallied more than 7 percent.

The Stoxx 600 Europe Index advanced 3.5 percent to 241.86 this past week. The gauge has risen 13 percent from this year’s low on Sept. 22 as euro-area leaders attempted to stem the region’s debt woes. The measure has still fallen 12 percent this year as the fiscal crisis spread from Greece to Italy and Spain.

“It’s a relief to see stabilization in the U.S. economy,” said Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg. “This stabilization allows us to focus less on the debt crisis in Europe. That’s favorable for the market, but it’s not time to become euphoric.”

Fitch Ratings on Dec. 19 lowered France’s credit outlook and put the grades of nations including Spain and Italy on review for a downgrade, citing Europe’s failure to find a “comprehensive solution” to the debt crisis.

CAC, DAX

National benchmark indexes rose in all of Europe’s 18 western markets, except Iceland. France’s CAC 40 Index surged 4.4 percent, the U.K.’s FTSE 100 Index gained 2.3 percent and Germany’s DAX Index increased 3.1 percent.

The volume of shares changing hands across Europe declined this week as the Christmas holiday approaches. Trading on the Stoxx 600 was 31 percent below the average for 2011, according to data compiled by Bloomberg.

U.S. jobless claims unexpectedly dropped to the lowest since April 2008, a sign that the U.S. labor market is strengthening. Claims fell by 4,000 to 364,000 in the week ended Dec. 17, Labor Department figures showed on Dec. 22 in Washington. The median forecast of 45 economists surveyed by Bloomberg News projected an increase to 380,000.

Another report that day showed American consumer confidence rose more than forecast in December, to a six-month high. The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 69.9 from 64.1 at the end of November.

Durable Goods

Orders for U.S. durable goods rose in November by the most in four months as demand for aircraft outweighed declines in spending on computers and equipment. Bookings rose 3.8 percent after no change in prior month that was previously reported as a decline, data from the Commerce Department showed yesterday.

In Germany, business confidence increased in December, suggesting Europe’s largest economy is weathering the euro area’s debt crisis. The sentiment gauge, based on a survey of 7,000 executives, rose to 107.2 from 106.6 in November, the Munich-based Ifo institute said on Dec. 20. The median economist forecast called for a drop to 106.

U.K. economic growth accelerated more than previously estimated in the third quarter in an increase that the Bank of England says is unlikely to be repeated as the euro-area debt crisis curbs bank lending and dents confidence. Gross domestic product rose 0.6 percent from the previous quarter, faster than the 0.5 percent previously estimated, the Office for National Statistics said.

Automakers Advance

Automobile shares gained 6.2 percent for the biggest increase among the 19 industry groups in the Stoxx 600. Faurecia advanced 11 percent. Daimler AG, the world’s third-largest maker of luxury vehicles, added 8.2 percent and PSA Peugeot Citroen, Europe’s second-biggest carmaker, rose 5.3 percent.

Construction shares rallied 5.2 percent as CRH, Ireland’s biggest cement maker, jumped 12 percent. YIT Oyj, Finland’s largest builder, climbed 11 percent and Cie. de Saint-Gobain SA, Europe’s biggest supplier of building materials, increased 5.5 percent.

Banks in the Stoxx 600 added 4.8 percent as a group. Credit Agricole, France’s third-largest lender, advanced 9.2 percent and Italy’s Intesa Sanpaolo increased 7.7 percent.

The ECB awarded euro-region banks 489 billion euros ($638 billion) in three-year loans, more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The central bank lent the funds at the average of its benchmark rate over the term of the loans.

The banks borrowed enough cash to refinance almost two- thirds of the debt they have maturing next year amid concern that markets will remain frozen.

Aggreko, PGS

Aggreko Plc, the world’s largest provider of mobile power- supplies, gained 10 percent for the biggest advance since July 2010. Citigroup Inc. recommended buying the shares, citing “impressive local business momentum.”

Petroleum Geo-Services ASA rallied 11 percent as the world’s third-biggest surveyor of oil and gas fields said it bought 250,000 of its own shares.

Wavin NV jumped 20 percent after Mexichem SAB, a Latin American chemicals maker, increased its takeover bid for the Dutch manufacturer by 11 percent to 10 euros a share.

Bayer AG increased 6.9 percent. The company said that four of its drugs in development may become blockbusters, ultimately contributing 5 billion euros to annual revenue.

SGL Carbon SE, a maker of carbon and graphite products, sank 19 percent for the biggest drop since 2008 and the worst performance in the Stoxx 600.

Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, bought a 15.7 percent stake in SGL, though it doesn’t plan to increase the holding for the next 12 months. SGL sees a full takeover by BMW and the carmaker’s heiress Susanne Klatten as unlikely, Chief Financial Officer Juergen Muth told the Frankfurter Allgemeine Sonntagszeitung.

BMW shares gained 5 percent.

--With assistance from Corinne Gretler in Zurich. Editors: Andrew Rummer, Srinivasan Sivabalan

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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