Bloomberg News

European Stocks Rebound From Selloff as Carmakers Climb

May 21, 2012

European stocks climbed, rebounding from last week’s biggest selloff since September, as China’s pledge to boost growth outweighed concern that Greece may be forced to leave the euro area.

Carmakers paced advancing shares as analysts recommended Renault SA (RNO) and Fiat SpA. (F) Barclays Plc rose after saying it plans to sell its entire $6.1 billion stake in BlackRock Inc. Carlsberg A/S (CARLA), the world’s fourth-biggest brewer, dropped 5.9 percent after ING Groep NV advised investors to sell the stock.

The Stoxx Europe 600 Index gained 0.5 percent to 240.17 at the close in London, recouping some of last week’s 5.2 percent drop. The gauge has lost 12 percent from this year’s high on March 16, amid mounting concern Greece will fail to implement austerity pledges and Spanish banks will need to be rescued.

“There is going to be an element of bargain hunting as investors look to top up their holdings on the basis of slightly lower prices,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers in London. “Politically, if not financially, the markets are kind of back to square one. If you take a more bottom-up approach, the picture is brighter.”

National benchmark indexes climbed in 12 of the 18 western European markets. The U.K.’s FTSE 100 gained 0.7 percent and Germany’s DAX increased 1 percent, while France’s CAC 40 rose 0.6 percent. Italy’s FTSE MIB lost 0.3 percent as 29 of the gauge’s companies traded without the right to their latest dividends.

China Growth

In China, Premier Wen Jiabao called for “putting stabilizing growth in a more important position” and refrained from mentioning concern about inflation in remarks published yesterday by the official Xinhua News Agency. China may announce stimulus actions in the near term, according to a front-page commentary today in the China Securities Journal, published by Xinhua.

German Finance Minister Wolfgang Schaeuble will, for the first time, discuss the euro at a meeting with his newly installed French counterpart, Pierre Moscovici, in Berlin today as European Union leaders prepare to meet in Brussels on May 23.

Group of Eight leaders on May 19 urged Greece to stay within the euro area as polls in the country showed a close race between parties supporting and opposing austerity measures linked to the EU-led bailout.

“Much of the bad news has already been discounted by the market, at least for now, but it will certainly make it difficult for any rallies to the upside to be maintained,” said Markus Huber, head of German sales trading at ETX Capital in London. “Overall market sentiment remains negative.”

Automakers Advance

Carmakers were among the biggest gainers of the 19 industry groups on the Stoxx 600, rebounding from a five-day selloff. Renault rallied 4.7 percent to 32.02 euros as UBS AG added the French carmaker to its European “key calls” list.

Fiat climbed 8.6 percent to 3.64 euros in Milan, the biggest gain in more than two months. Sanford C. Bernstein & Co. upgraded the carmaker to outperform, the equivalent of a buy recommendation, from market perform with a price estimate of 5 euros. That’s 51 percent above last week’s close.

Barclays rose 2.2 percent to 180 pence after the lender said it plans to sell its entire holding in BlackRock before the latest round of Basel rules stops it from counting the holding as capital.

BlackRock will buy back as much as $1 billion of shares from Barclays as part of the transaction. The British bank took the 19.6 percent holding when it sold Barclays Global Investors to BlackRock in December 2009 for about $15.2 billion.

Banco Popolare

Banco Popolare SC (BP) surged 19 percent to 1.04 euro cents, the biggest jump since at least July 2007, as analysts from Bank of America Corp. to Exane BNP Paribas upgraded the shares after Italy’s fourth-biggest bank said regulatory approval to use internal risk models boosted its Tier 1 capital.

Bank of America raised its recommendation for the bank to buy from neutral. Exane upgraded Banco Popolare’s shares to outperform, Societe Generale SA lifted its rating to hold and Banca IMI SpA upgraded its advice to buy.

Sacyr Vallehermoso SA (SYV) rallied 11 percent to 1.42 euros in Madrid. Former Chairman Luis del Rivero finished selling an additional 3 percent stake in the Spanish builder on May 18, Expansion reported, citing people in the market it didn’t name. With the sale, Rivero has offloaded almost his entire holding in the company, the newspaper said.

Man Group Gains

Man Group Plc (EMG) gained 4.7 percent to 78.8 pence, recouping some of last week’s 14 percent slump. The world’s largest publicly traded hedge fund has agreed to buy FRM Holdings Ltd., adding $8 billion of assets invested in other hedge fund managers as its own stock price sinks.

Man will pay as much as $82.8 million in cash over three years, depending on the level of assets FRM retains following the takeover.

Carlsberg dropped 5.9 percent to 458.90 kroner after ING cut the stock to sell from hold, saying investors have focused too much on the positive aspects of first quarter earnings. Threats to the company’s beer-market position in Russia remain, ING said.

Banco Santander SA (SAN) lost 1.4 percent to 4.51 euros after the Wall Street Journal reported the bank’s U.K. unit lost 200 million pounds ($317 million) in deposits on May 18, citing Steve Pateman, head of U.K. banking for the Spanish lender.

The withdrawals represented about 0.2 percent of Santander’s total customer deposits in the U.K., Pateman told the newspaper. Deposits totaled 120.1 billion pounds at the end of 2011, the WSJ reported yesterday, without saying where it got the information.

Banco Bilbao Vizcaya Argentaria SA (BBVA) dropped 1.2 percent to 4.89 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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