Bloomberg News

European Stocks Rise the Most in a Month; Vodafone Climbs

May 22, 2012

A pedestrian passes a Vodafone Group Plc communications store. Photographer: Akos Stiller/Bloomberg

A pedestrian passes a Vodafone Group Plc communications store. Photographer: Akos Stiller/Bloomberg

European stocks climbed the most in a month amid speculation that China and the euro area will do more to stimulate global economic growth.

Vodafone Group Plc (VOD) gained 4.2 percent after posting quarterly service revenue that exceeded analysts’ estimates. Accor SA (AC) surged after saying it will sell its budget Motel 6 chain for $1.9 billion. Sonova Holding AG (SOON) plunged 9.9 percent, its biggest decline in more than a year, after reporting full- year earnings that fell short of analysts’ forecasts.

The Stoxx Europe 600 Index (SXXP) gained 1.9 percent to 244.7 at the close, its biggest rally since April 17. The gauge has still fallen 10 percent from this year’s high on March 16 amid mounting concern that Greece will elect a government opposed to implementing pledged austerity measures.

“The rally is mostly technically driven after we became quite oversold last week,” said Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GmbH, which oversees about $22 billion. “The worries that we have seen, they still persist. The next thing that the markets are really focusing on are the Greek elections and in essence if Greek voters will vote to stay in the euro or not.”

The Stoxx 600 increased 0.5 percent yesterday as China pledged to boost growth, outweighing concern that Greece will have to leave the euro area following its new election.

European Union Meeting

Germany’s Chancellor, Angela Merkel, said she may disagree with France’s President, Francois Hollande, on how to tackle the sovereign-debt crisis at a meeting on May 23.

Cooperation “doesn’t exclude differing positions,” Merkel told reporters yesterday in Chicago during a meeting of the North Atlantic Treaty Organization. “These may very well arise in the context of the European discussions.”

Germany will consider all ideas on bolstering euro-area growth, Finance Minister Wolfgang Schaeuble said as he and his French counterpart, Pierre Moscovici, met.

“We will engage all ideas constructively and find solutions in order to strengthen sustainable growth,” Schaeuble said after meeting Moscovici for the first time yesterday in Berlin. Moscovici, who became finance minister last week, said Hollande wants “everything on the table,” including joint euro-area bonds, at a meeting of European leaders tomorrow. Hollande has proposed that the 17 members of the euro area issue joint bonds, allowing the most-indebted countries to cut their borrowing costs.

National benchmark indexes climbed in 16 of the 18 western- European markets. The U.K.’s FTSE 100 and France’s CAC 40 advanced 1.9 percent. Germany’s DAX increased 1.7 percent.

OECD Report

The Organization for Economic Cooperation and Development said the debt crisis may spiral, damaging the world economy.

“The risk is increasing of a vicious circle, involving high and rising sovereign indebtedness, weak banking systems, excessive fiscal consolidation and lower growth,” OECD Chief Economist Pier Carlo Padoan wrote in the organization’s semi- annual report on the global economy.

In the U.S., a report showed that sales of existing houses increased in April for the first time in three months. Purchases gained 3.4 percent to a 4.62 million annual rate last month. That beat the median forecast of 73 economists surveyed by Bloomberg News for sales to climb 2.9 percent.

China’s Infrastructure Spending

China plans to speed up approval of infrastructure projects and allocate construction funding faster to aid growth, the China Securities Journal reported.

Japan’s sovereign-credit rating was lowered by Fitch Ratings today because of the nation’s limited progress in tackling the world’s biggest public-debt burden.

Vodafone gained 4.2 percent to 172 pence. Europe’s largest mobile-phone company said fourth-quarter service revenue excluding currency swings and acquisitions increased 2.3 percent. It rose 0.9 percent in the previous quarter. Analysts had estimated growth of 1.7 percent.

Earnings before interest, taxes, depreciation and amortization in the 12 months through March dropped to 14.5 billion pounds ($23 billion) from 14.7 billion pounds a year earlier, the company said. The average estimate of analysts in a Bloomberg survey had called for 14.5 billion pounds.

Accor surged 5.8 percent to 26.03 euros, its biggest advance since November. Europe’s largest hotel operator said it will sell its budget chain to a fund managed by Blackstone Group LP for $1.9 billion to pay down debt.

Lafarge, Renault, Fiat

Lafarge SA (LG), the world’s biggest cement maker, rose 5.3 percent to 30.15 euros on speculation that the Chinese government will accelerate its infrastructure projects. Holcim SA, the second-largest cement maker, gained 1.6 percent to 54.90 Swiss francs. HeidelbergCement AG (HEI), the world’s third-biggest maker of cement, added 4.7 percent to 36.87 euros.

Renault SA (RNO) and Fiat SpA (F) rose 6.3 percent to 34.04 euros and 6.4 percent to 3.87 euros, respectively. A gauge of carmakers posted the biggest rally of the 19 industries in the Stoxx 600.

Rio Tinto Group, the world’s third-biggest mining company, climbed 4 percent to 2,936.5 pence. Copper producer Vedanta Resources Plc (VED) gained 3.9 percent to 1,047 pence.

Eurasian Natural Resources Corp., a metal producer in Kazakhstan, rose 3.2 percent to 476.3 pence. The company plans to increase iron-ore sales to China by 20 percent this year, Alexander Machkevitch, one of the company’s three founders, said. Sales may climb to more than 6 million metric tons from about 5 million tons last year, Machkevitch said at a conference in Astana today.

Banca Carige Jumps

Italy’s Banca Carige SpA (CRG) surged 13 percent to 74 euro cents. The Italian lender said it will create a subsidiary to manage 353 branches outside the Liguria region. Banca Monte dei Paschi di Siena SpA jumped 5.6 percent to 23.02 cents.

CRH Plc (CRH), the world’s second-biggest building-materials maker, rose 3.8 percent to 14.35 euros. Credit Suisse Group AG upgraded the shares to neutral from underperform.

Intermediate Capital Group Plc soared 17 percent to 265.1 pence, its largest gain since 2009 and the biggest rally on the Stoxx 600. The financier of leveraged buyouts said net income rose to 188.3 million pounds for the fiscal year ending March 31 from 128.2 million pounds a year earlier.

PostNL NV (PNL) jumped 12 percent to 2.90 euros after the Dutch antitrust regulator said the company hasn’t abused its dominant position in the postal market.

Sonova tumbled 9.9 percent to 84.10 francs. The maker of Phonak hearing aids reported full-year earnings that missed analysts’ estimates as the strength of the Swiss franc reduced the value of sales from outside its domestic market.

Homeserve Plc (HSV) plunged 29 percent to 160.9 pence after saying the Financial Services Authority will investigate “certain historic issues.” The U.K. provider of emergency- repair services suspended telephone sales and marketing in October after a review showed they didn’t meet its standards.

The volume of shares changing hands on the Stoxx 600 was 6.4 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

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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