Bloomberg News

European Stocks Rally After Germany Data; EasyJet Climbs

March 26, 2012

ING Groep NV  rose 1.2 percent after the Dutch company was said to seek to sell its Asian insurance unit for at least $7 billion. Photographer: Jock Fistick/Bloomberg

ING Groep NV rose 1.2 percent after the Dutch company was said to seek to sell its Asian insurance unit for at least $7 billion. Photographer: Jock Fistick/Bloomberg

European stocks advanced for a second day after German business confidence unexpectedly climbed and Federal Reserve Chairman Ben S. Bernanke said continued accommodative monetary policy is still needed.

EasyJet Plc (EZJ) jumped 7.5 percent after the discount airline revised its earnings outlook. Lundin Petroleum AB (LUPE) rallied 7 percent after a well appraisal in Norway. Tullow Oil Plc (TLW) gained 6.6 percent after reporting Kenya’s first oil discovery. Spanish banks and construction companies fell.

The Stoxx Europe 600 Index (SXXP) climbed 1 percent to 268.21 at the close in London. The gauge has advanced 9.7 percent so far this quarter, on track for the best quarterly advance since September 2009, boosted by the European Central Bank’s 1 trillion euro ($1.3 trillion) loan to the region’s lenders.

Today’s data “shows welcome signs of resilience in the Germany economy, which comes as reassuring news following the disappointing PMI survey released last week,” said Marco Valli, chief eurozone economist at UniCredit SpA in Milan. “If Germany holds up well, chances that economic activity will stabilize in the rest of the eurozone increase.”

Germany’s Ifo institute reported its business climate index, based on a survey of 7,000 executives, rose to 109.8 from a revised 109.7 last month. Economists had forecast it to remain unchanged at the initial February reading of 109.6.

European stocks last week tumbled the most this year, sending the Stoxx 600 down 2.5 percent, as manufacturing data from China to the U.S. and Europe raised concern about the strength of the global economic recovery.

National benchmark indexes rose in 15 of 18 western- European markets. Germany’s DAX rallied 1.2 percent, France’s CAC 40 climbed 0.7 percent, the U.K.’s FTSE 100 gained 0.8 percent while Spain’s IBEX 35 Index fell 0.7 percent.

U.S. Monetary Policy

Federal Reserve Chairman Ben S. Bernanke said that while he’s encouraged by the unemployment rate’s decline to 8.3 percent, continued accommodative monetary policy will be needed to make further progress.

The decline in unemployment may reflect “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009,” Bernanke said in a speech today in Arlington, Virginia. “To the extent that this reversal has been completed, further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.”

Debt Firewall

Chancellor Angela Merkel gave her first indication that she is prepared to allow an increase in the debt-crisis firewall, saying that Germany could let the temporary and permanent rescue funds run in parallel.

Merkel cited “fragility” in Spain and Portugal as she revealed Germany’s position on addressing the future financial backstop. Agreement among euro-area governments this week “could be the basis” for the International Monetary Fund to channel more resources to help fight the turmoil, she told reporters in Berlin today.

EasyJet rallied 7.5 percent to 495.80 pence after Europe’s second-biggest airline forecast a first-half pretax loss of 110 million to 120 million pounds. The company had predicted a loss of 140 million to 160 million pounds.

Separately, the airline’s chief executive officer, Carolyn McCall, told Frankfurter Allgemeine Sonntagszeitung that the company will grow faster than the European air transport market.

EasyJet’s growth will come “with a profit,” the newspaper quoted McCall as saying. “We are looking now for profitable growth and don’t only want to gain market share.”

Larger Irish rival Ryanair Holdings Plc (RYA) advanced 2.6 percent to 4.43 euros, while Deutsche Lufthansa AG gained 1.6 percent to 10.47 euros.

Lundin Gains

Lundin Petroleum rallied 7 percent to 150.60 kronor after a well appraisal confirmed a previous find at its Johan Sverdrup Well off the coast of Norway.

Tullow Oil increased 6.6 percent to 1,570 pence after the U.K. explorer reported Kenya’s first oil discovery.

Tullow found 20 meters of oil in the Ngamia-1 exploration well with Canadian partner Africa Oil Corp. The well, in Block 10BB of the Turkana County, has been drilled to about a third of its target depth.

Technip SA (TEC) jumped 4.1 percent to 88.44 euros after Europe’s second-largest oil-services provider won its biggest U.K. North Sea contract, worth 600 million euros, from a BP Plc (BP/) led group.

Aberdeen Asset Management Plc gained 4.4 percent to 260.80 pence after the Scottish money manager said funds under management increased 6 percent to 184.4 billion pounds ($293 billion) in the first two months of this year as clients added money to its equities funds.

Spanish Banks

Banco Sabadell SA led Spanish lenders lower, falling 4 percent to 2.15 euros. Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s biggest bank, retreated 1.4 percent to 6.15 euros.

Italy’s Prime Minister, Mario Monti, warned that Spain could reignite the European debt crisis as euro-area ministers this week prepare a deal to strengthen the region’s financial firewall.

Monti highlighted Spain’s struggle to control its finances ahead of a finance ministers meeting in Copenhagen starting on March 30, where officials will seek agreement to raise a 500 billion-euro ceiling on bailout funding.

Spanish construction-related companies also declined in Madrid trading. Actividades de Construccion y Servicios SA dropped 4 percent to 20.27 euros and Sacyr Vallehermoso SA (SYV) retreated 2.3 percent to 2.47 euros.

Finmeccanica SpA (FNC) lost 1.5 percent to 3.47 euros after the Financial Times reported the Italian defense company will this week unveil “heavy losses” for 2011 of about 2.3 billion euros.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

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


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