Bloomberg News

European Stocks Close Little Changed; Halfords Rallies

October 04, 2012

European Stocks Advance as Investors Await ECB Policy Meeting

A visitor views share price information on computer monitors inside the Madrid Stock Exchange in Madrid. Photographer: Angel Navarrete/Bloomberg

European stocks closed little changed as the European Central Bank and the Bank of England left their benchmark interest rates on hold.

Nobel Biocare Holding AG (NOBN) slid 4.3 percent as the health- care company said a deteriorating Japanese market will hurt full-year profit. ThyssenKrupp AG (TKA) gained 2.3 percent on a report that Korean steelmaker Posco submitted a letter of intent for its American unit. Halfords Group Plc (HFD) surged the most ever after saying earnings will be in the upper half of its forecast.

The Stoxx Europe 600 Index (SXXP) decreased less than 0.1 percent to 271.33 at the close of trading, having fluctuated between gains and losses at least 20 times. The gauge has still climbed 11 percent this year as ECB policy makers agreed on an unlimited asset-purchase program to bring down borrowing costs in Spain and Italy and the Federal Reserve announced a third round of quantitative easing.

“In the absence of any positive news from Spain, or any news that might help set the direction, markets are languishing a bit,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London. “Looking ahead, we have the payrolls from the U.S. tomorrow that might help.”

The ECB kept its benchmark interest rate at a record low of 0.75 percent, as predicted by 48 of 52 economists in a Bloomberg survey. The central bank is ready to start buying government bonds as soon as the necessary conditions are fulfilled, President Mario Draghi said today at a press conference in Ljubljana, Slovenia.

The Bank of England maintained its bond-purchase target at 375 billion pounds ($604 billion) and held interest rates at 0.5 percent, as economists had forecast.

Spanish Bonds

Spain’s three-year borrowing costs increased at a debt auction today, with the average yield rising to 3.956 percent from 3.845 percent the last time the benchmark note was issued on Sept. 20. Demand climbed to 1.98 times the amount sold, compared with 1.56 times last month.

Prime Minister Mariano Rajoy has refrained from seeking a bailout for the indebted country, a month after the ECB announced an unlimited bond-buying plan to preserve the euro.

In the U.S., initial jobless claims increased to 367,000 last week from a revised 363,000 the prior period, a Labor Department report showed. Economists in a Bloomberg survey had predicted a reading of 370,000.

A separate report showed factory orders declined 5.2 percent in August, following a revised 2.6 percent gain a month earlier. Economists had predicted a 5.9 percent drop.

U.S. Payrolls

Government data tomorrow may show U.S. employers added 115,000 workers to payrolls in September, according to the median forecast in a Bloomberg survey of 89 economists. The Fed will release minutes from the latest policy meeting at 2 p.m. New York time, after European markets close.

“The most important message will be from the employment data from the U.S. on Friday,” Herbert Perus, who helps oversee about $36 billion as head of equities at Raiffeisen in Vienna, said in a phone interview. “This will be crucial.”

National benchmark indexes declined in 12 of the 18 western European markets. Germany’s DAX fell 0.2 percent and France’s CAC 40 declined 0.1 percent. Britain’s FTSE 100 was little changed while the Swiss Market Index rose 0.4 percent.

Nobel Biocare

Nobel Biocare retreated 4.3 percent to 9.03 Swiss francs after saying a drop in the Japanese market in the third quarter is “materially impacting” full-year sales and profit. The world’s second-biggest maker of dental implants said annual earnings before interest and taxes will be in the range of 67 million euros to 70 million euros. While Japan represents 13 percent of sales, it contributes “disproportionately high profit,” the company said.

Straumann Holdings AG, the biggest maker of dental implants, slid 3.3 percent to 119.90 francs.

Gerresheimer AG (GXI) lost 2.3 percent to 39.79 euros. The German producer of pharmaceutical and health-care equipment posted third-quarter adjusted earnings of 62 cents per share, missing the average analyst estimate of 70 cents.

SAP AG dropped 1.5 percent to 54.24 euros after peer Informatica Corp. posted preliminary third-quarter earnings that missed analyst estimates. The U.S. software vendor said its performance in Europe accounted for most of the sales drop.

Tesco Plc (TSCO) lost 3 percent to 318.15 pence, the largest decline in almost nine months. Citigroup Inc. and Exane BNP Paribas lowered their price estimates on the shares and Natixis cut its rating on the company to reduce from neutral a day after U.K.’s biggest retailer posted its first profit drop in nearly two decades.

ThyssenKrupp, Halfords

ThyssenKrupp advanced 2.3 percent to 17.38 euros after MoneyToday said Posco submitted a letter of intent for the German company’s Steel Americas unit on Sept. 28, citing unidentified people familiar with the matter.

Halfords surged 14 percent to 303.5 pence, the most since the company listed in 2004, after the company said it expects 2013 profit before tax in the upper half of its previously forecast range of 62 million pounds to 70 million pounds. The company also reported second-half same-store sales growth that beat analyst estimates.

Bayerische Motoren Werke AG (BMW) added 3.2 percent to 59.76 euros after the German automaker said group sales in China rose 59 percent in September.

A gauge of carmakers was the best-performing group on the Stoxx 600. Fiat SpA (F) gained 2.1 percent to 4.44 euros and Daimler AG (DAI) climbed 1.2 percent to 38.51 euros. Preferred shares of Volkswagen AG advanced 2.9 percent to 145.35 euros.

Tate & Lyle Plc (TATE) added 1.9 percent to 687 pence after Credit Suisse Holding AG raised its rating on the maker of low-calorie sweetener Splenda to outperform from neutral. The new recommendation is the equivalent of buy.

Banco Espirito Santo SA advanced 6.8 percent to 63 cents and Banco BPI SA climbed 2.7 percent to 83.5 cents after Bank of Portugal said they were among lenders that met the European Banking Association’s capital requirements.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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


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