Bloomberg News

European Stocks Rise as Ministers Agree on Rescue Ceiling

March 30, 2012

European stocks rose, capping the best first-quarter rally for the Stoxx Europe 600 Index since 2006, as euro-area finance ministers set the overall ceiling for the rescue of the region’s indebted nations at $1.1 trillion.

Brisa Auto-Estradas de Portugal SA (BRI), Portugal’s biggest highway operator, surged 14 percent after shareholders with a combined 50 percent stake offered to buy the rest of the company. Daimler AG (DAI) rallied as Bank of America Corp. recommended the shares. HeidelbergCement AG (HEI) jumped 4.3 percent after HSBC Holdings Plc raised its rating on the stock.

The Stoxx 600 (SXXP)gained 1 percent to 263.32 at the close in London, trimming this week’s decline to 0.9 percent, as U.S. personal spending topped forecasts. The benchmark gauge has surged 7.7 percent this year as Greece obtained a second bailout and U.S. economic data beat economist projections.

“The U.S. recovery is now sustainable,” said Larry Hatheway, a London-based economist and asset-allocation strategist at UBS AG. “Europe is still at pains but northern Europe remains one of the stronger areas in terms of growth.” He spoke to Linda Yueh and Mark Barton in a Bloomberg Television interview.

The volume of shares changing hands in the companies listed on the Stoxx 600 was 11 percent higher than the average of the last 30 days, data compiled by Bloomberg show. The VStoxx Index, which measures the cost of options on the Euro Stoxx 50 Index, fell 11 percent to 22.55, its largest decline since December.

National benchmark indexes rose in all of the 18 western European markets, except Greece. Germany’s DAX Index gained 1 percent. The U.K.’s FTSE 100 added 0.5 percent and France’s CAC 40 advanced 1.3 percent.

Financial Firewall

Euro-area ministers, meeting in Copenhagen today, set the maximum lending volume of the proposed European Stability Mechanism at 500 billion euros ($667 billion) and the combined lending ceiling of the ESM and the temporary fund -- the European Financial Stability Facility -- at 700 billion euros.

This, in addition to the 102 billion euros already paid to support current rescue programs, takes the total size of the firewall to 800 billion euros, the Eurogroup said.

“Finally, robust firewalls have been established,” the ministers said in a statement. “This comprehensive strategy has paid off and led to a significant improvement in market conditions.”

In the U.S., consumer spending rose in February by the most in seven months, showing the biggest part of the economy is strengthening. Purchases climbed 0.8 percent, the largest gain since July, Commerce Department figures showed.. The median estimate of economists surveyed by Bloomberg News called for a 0.6 percent increase.

Consumer Sentiment

The Thomson Reuters/University of Michigan final index of U.S. consumer sentiment for March rose to 76.2 from 75.3 at the end of last month. Economists had projected a reading of 74.5 after a preliminary figure of 74.3, according to the median estimate in a Bloomberg survey.

Brisa surged 14 percent to 2.67 euros, its biggest gain since at least 1997, according to data compiled by Bloomberg. Jose de Mello SGPS SA, a holding company for one of Portugal’s richest families, and Aeif Apollo Sarl are offering 2.66 euros in cash per Brisa share, they said yesterday after trading ended in Lisbon.

Daimler rose 2.1 percent to 45.21 euros as a gauge of carmakers was the best-performing group in the Stoxx 600. (SXXP) Bank of America recommended buying Daimler’s shares, saying the company “is finally cutting out costs, reducing complexity, simplifying engineering and refreshing the product portfolio.”

BMW, Volkswagen

Bayerische Motoren Werke AG (BMW) advanced 2.4 percent to 67.43 euros. Preferred shares of Volkswagen, Europe’s largest maker of automobiles, gained 1.5 percent to 131.55 euros.

Michelin & Cie., the world’s second-largest tiremaker, climbed 2.4 percent to 55.83 euros and Continental AG (SXXP) rallied 3.1 percent to 70.77 euros.

BHP Billiton, the world’s biggest mining company, added 1.6 percent to 1,907.5 pence as a gauge of basic-materials shares rose 2.6 percent. Rio Tinto Group, the third-largest mining company, gained 2.1 percent to 3,446 pence.

Red Electrica Corp. SA, the operator of Spain’s electricity network, rose 4.2 percent to 36.69 euros. Iberdrola, the nation’s biggest power company, gained 1.8 percent to 4.26 euros. Enagas SA, the operator of the natural gas grid, added 4 percent to 14.43 euros.

Spain will raise power prices on April 1 by 7 percent, natural gas prices by 5 percent and cut capacity and distribution payments to power companies to comply with an order from the Supreme Court.

HeidelbergCement Gains

HeidelbergCement jumped 4.3 percent to 45.39 euros after HSBC upgraded the stock to overweight from neutral, meaning that investors should hold more shares than are represented in benchmark indexes. Lafarge SA (LG), the world’s biggest cement maker, advanced 5.2 percent to 36.02 euros.

Meyer Burger Technology gained 1 percent to 14.75 Swiss francs after HSBC raised its recommendation on the shares to neutral, the equivalent of hold, from underweight, the equivalent of sell.

Commerzbank AG (CBK) added 2.2 percent to 1.90 euros. Germany’s second-largest bank plans to set up a so-called bad bank to liquidate its Eurohypo AG public-finance and commercial-property unit over the coming years, Handelsblatt reported, citing unidentified people in the finance industry.

Vestas Wind Systems A/S (VWS), the world’s largest wind-turbine maker, gained 1.8 percent to 56.60 kroner. The stock was raised to neutral from sell at UBS AG, which said the company could be a target for acquisition.

Subsea Advances

Subsea 7 SA added 2.9 percent to 150.80 kroner. The oilfield-services provider won a $175 million contract for work at the Cheviot Oil Field.

Telecom Italia SpA (TIT) fell 0.9 percent to 89.15 euro cents. Italy’s biggest phone company posted a bigger-than-estimated loss in 2011 after Italy’s largest phone company wrote down goodwill for 7.3 billion euros.

Shire Plc (SHP) dropped 4.6 percent to 2,020 pence after saying its Lialda drug for ulcerative colitis failed in a trial that would have expanded its use and potentially reach sales of more than $2 billion.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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


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