Bloomberg News

European Stocks Rise Amid Greek, Troika Policy Talks

August 06, 2012

Most European Stocks Advance Amid Greek, Troika Policy Talks

A decorative artwork of stock index lines hangs above the atrium at the Hellenic stock exchange in Athens. Photographer: Chris Ratcliffe/Bloomberg

European stocks climbed, extending a four-month high for the Stoxx Europe 600 Index, as Greece and its creditors agreed on the need to strengthen policy efforts to support economic growth.

BNP Paribas SA led banks higher, rallying 3.8 percent in Paris. Cie. Financiere Richemont SA jumped 5.2 percent after the luxury-goods maker projected a jump in first-half profit. Carmakers gained after Japanese rival Toyota Motor Corp. raised its sales target.

The benchmark Stoxx 600 (SXXP) added 0.5 percent to 266.80 at the close of trading. The gauge last week increased 2.2 percent to the highest level since April 2, boosted by a U.S. jobs report that topped economists’ forecasts.

There is “too much pessimism on policy,” wrote Andrew Garthwaite, a strategist at Credit Suisse Group AG which today upgraded continental European equities to benchmark. “Earnings revisions relative to those of global markets are positive and relative economic momentum is troughing,” he said in a note to clients.

The Stoxx 600 has climbed for nine consecutive weeks, its longest stretch of gains since January 2006, as policy makers eased repayment terms for Spain’s banks and optimism grew that central banks would announce stimulus measures to support economic growth.

The volume of shares changing hands in companies listed on the index was 18 percent lower than the average of the last 30 days, data compiled by Bloomberg showed today.

Greek Rescue

Greece and its international creditors have agreed on the need to strengthen policy efforts and comply with its bailout terms after more than a week of meetings.

Representatives from the so-called troika of the European Commission, European Central Bank and International Monetary Fund met with Greek Finance Minister Yannis Stournaras in Athens yesterday at the conclusion of the meetings. The talks will determine whether Greece continues receiving funds from the country’s 240 billion euros ($297 billion) of rescue packages.

Elsewhere, German Chancellor Angela Merkel’s government today backed ECB President Mario Draghi’s proposals on bond buying to help bring down borrowing costs in Spain and Italy.

The government is “not worried” by Draghi’s announcement of Aug. 2, deputy Merkel spokesman Georg Streiter told reporters at a regular press briefing in Berlin today, when asked whether the government is concerned that ECB independence might be compromised.

National benchmark indexes advanced in 15 of the 17 western European markets that were open today. Iceland was closed. France’s CAC 40 gained 0.8 percent, the U.K.’s FTSE 100 rose 0.4 percent, while Germany’s DAX jumped 0.8 percent.

Bank Shares

BNP Paribas jumped 3.8 percent to 33.20 euros, extending last week’s 6 percent rally following Draghi’s push to set up a bond-buying plan. Credit Agricole SA (ACA) climbed 5.2 percent to 3.73 euros and Societe Generale SA (GLE) increased 2.2 percent to 18.93 euros.

“Investors are reappraising Draghi’s comments,” said Jon Peace, a London-based analyst at Nomura Holdings Inc. who has a buy rating on BNP Paribas. “BNP comes on top of the list if investors are more confident and want to get more exposure to euro-zone banks.”

Banco Bilbao Vizcaya Argentaria SA (BBVA) rallied 4.5 percent to 5.59 euros and Banco Santander SA (SAN) increased 4 percent to 5.19 euros after a technical fault at Bolsas & Mercados Espanoles SA, the operator of the Madrid exchange, halted trading in Spain for more than 4 1/2 hours.

Richemont Forecast

Richemont gained 5.2 percent to 58.95 Swiss francs, the highest level since March 15, after the maker of Cartier watches projected a 20 percent to 40 percent jump in first-half profit. The company reported a 24 percent increase in sales for the first-four months of its fiscal year.

Peugeot SA (UG) led carmakers higher, rallying 7.8 percent to 6.37 euros after Toyota, Asia’s largest automaker, reported profit that beat analysts’ estimates and raised its sales target.

Renault SA (RNO) climbed 4.6 percent to 36.61 euros, Fiat SpA (F) increased 4 percent to 4.18 euros and Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury cars, added 2.4 percent to 59.50 euros.

Ageas, Catlin

Ageas SA (AGS) climbed 5.2 percent to 1.73 euros after the majority owner of Belgium’s biggest life insurer reported insurance profit that beat analyst estimates and announced a stock buyback as a lockup on 78.9 million shares held by BNP Paribas SA (BNP) expires.

Second-quarter profit from insurance operations was 147.6 million euros compared with a loss of 23.6 million euros a year earlier. Analysts had estimated 133.5 million euros, the average of three in a Bloomberg News survey.

Catlin Group Ltd. (CGL) added 2.6 percent to 443.3 pence. The Lloyd’s of London insurer swung to a profit on premium rate increases and this year’s lack of natural disasters. First-half pretax profit was $231 million compared with a pretax loss of $201 million in the year-earlier period.

“The rating environment continues to be favorable, as average weighted premium rates across the portfolio increased by 5 percent during the first half of 2012,” Stephen Catlin, the company’s chief executive officer, said in a statement.

PostNL NV (PNL) paced declining shares, falling 5.2 percent to 3.08 euros, after the Dutch company cut its full-year sales forecast and said it sees cash operating income at the lower half of the 110 million to 160 million-euro range. Second- quarter earnings also missed analyst estimates.

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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