Bloomberg News

European Stocks Climb as Americans Vote; ARM, Adecco Gain

November 06, 2012

European stocks advanced for the third time in four days as Americans went to the polls to elect their president.

ARM Holdings Plc increased 2.1 percent as Apple Inc. (AAPL:US) was said to explore how to use the chip designs from its mobile devices in Mac personal computers. Adecco SA (ADEN) climbed 3.2 percent after the world’s biggest supplier of temporary workers reported earnings that exceeded estimates. Volkswagen AG (VOW) dropped 4.1 percent as the carmaker sold 2.5 billion euros ($3.2 billion) of bonds that convert into shares.

The Stoxx Europe 600 Index (SXXP) increased 0.6 percent to 274.74 at the close of trading, as more than two shares rose for every one that declined. The equity benchmark has surged 17 percent from its low on June 4, as the European Central Bank and the Federal Reserve announced further rounds of asset buying.

“Europeans would like to see Barack Obama elected because they know where he stands,” said Robert Halver, head of capital markets research at Baader Bank AG in Frankfurt. “Whichever president is elected will have to face the fiscal-cliff debate.”

The so-called fiscal cliff refers to the $607 billion in federal spending cuts and tax increases scheduled to take effect in January unless the U.S. Congress acts.

Election Polls

U.S. voters decide today between giving President Barack Obama another four years in office or replacing him with Mitt Romney. Obama led Romney 48 percent to 45 percent in a national poll conducted by the Pew Research Center released on Nov. 4. The survey, conducted Oct. 31-Nov. 3 among 2,709 likely voters, has a margin of error of 2.2 percentage points.

The Bank of England and the ECB will both leave their key interest rates unchanged at meetings on Nov. 8, according to Bloomberg surveys of economists. China’s President Hu Jintao will probably hand over the Communist Party leadership to Vice President Xi Jinping at a congress that begins the same day.

The number of shares changing hands in companies listed on the Stoxx 600 was 21 percent lower than the 30-day average today, according to data compiled by Bloomberg.

“Volumes are very thin, with investor attention taken up entirely with the U.S. elections and the critical Greek vote,” said Jeremy Batstone-Carr, head of research at Charles Stanley Group Plc in London. “Low volumes could see equities blown around quite a bit.”

In Greece, Prime Minister Antonis Samaras must face down dissent within his three-party coalition to get a package of austerity measures and economic reforms ratified and obtain the next slice of aid from a European Union-led bailout.

Greek Strikes

The Democratic Left party’s lawmakers said they won’t support the bill because of proposed changes to labor laws. Unions began a 48-hour general strike today to protest against the measures. The vote will be held as soon as tomorrow, followed by another ballot on the 2013 budget on Nov. 11.

EU Economic and Monetary Affairs Commissioner Olli Rehn, speaking at a meeting of Group of 20 finance chiefs in Mexico City yesterday, said that euro-area finance ministers must agree on a deal for Greece at a meeting in Brussels on Nov. 12. A European G-20 official speaking before Rehn and on condition of anonymity cast doubt on the prospects for that deadline.

Stocks gained even as a report showed German factory orders fell the most in a year in September. Orders, adjusted for seasonal swings and inflation, slumped 3.3 percent, the Economy Ministry said today. Economists had forecast a 0.4 percent decline, according to the median of 40 estimates in a Bloomberg survey.

National benchmark indexes rose all 18 western European markets, except Denmark. France’s CAC 40 Index climbed 0.9 percent, the U.K.’s FTSE 100 Index added 0.8 percent and Germany’s DAX Index increased 0.7 percent. The OMX Copenhagen 20 Index sank 3 percent as Novo Nordisk A/S (NOVOB) plunged 6.9 percent.

ARM Advances

ARM (ARM), whose chip designs power Apple’s iPhones, rose 2.1 percent to 709.5 pence. Apple’s engineers have grown confident that the chip technology used for its mobile devices will have enough power to run its desktops and laptops, according to three people familiar with the company’s research. Apple has used processors from Intel Corp. for its Macs since 2005.

Adecco advanced 3.2 percent to 46.60 Swiss francs as the world’s biggest supplier of temporary workers reported third- quarter profit of 118 million euros. That beat the median analyst estimate for net income of 103.2 million euros.

Air France-KLM (AF) Group, Europe’s largest airline, surged 5.3 percent to 7.34 euros, its highest price since August 2011. Italian newspaper La Repubblica reported that Alitalia SpA, which is partly owned by Air France, plans to sell assets to avoid a capital increase.

Minimum Wage

Separately, Le Point newspaper said yesterday that the French government may trim social taxes for wages between 1 and 2.5 times the minimum wage starting in 2013. The change could boost Air France’s 2014 earnings before interest and taxes by about 60 million euros, Loic Sabatier, an analyst at MainFirst Bank, said in a note to investors today. The airline employed about 50,000 ground staff in 2011, he said.

Fraport AG gained 5.3 percent to 46.22 euros after the owner of Frankfurt airport said quarterly profit jumped 36 percent as passenger numbers increased.

Hannover Re rallied 4.5 percent to 55.90 euros as the world’s fourth-biggest reinsurer forecast record earnings this year. Third-quarter profit rose 63 percent to 265.5 million euros from 163.2 million euros a year earlier, the reinsurer said. That beat the 216 million-euro average estimate of 17 analysts surveyed by Bloomberg.

Munich Re

Munich Re, the world’s biggest reinsurer, and Allianz SE (ALV), Europe’s largest insurance company, rose 1.8 percent to 127.60 euros and 1.1 percent to 96.39 euros, respectively. A gauge of insurance companies posted the second-biggest gain of the 19 industry groups in the Stoxx 600, climbing 1.1 percent.

Volkswagen dropped 4.1 percent to 155.70 euros as Europe’s largest carmaker sold bonds that automatically convert into shares at maturity to bolster its capital base following its purchases of Porsche and Ducati.

Novo Nordisk sank 6.9 percent to 860 kroner, the biggest decline in 15 months. A report from the U.S. Food and Drug Administration found that the company’s once-a-day insulin treatment Tresiba carries a higher heart risk than other diabetes treatments.

Andritz AG (ANDR) fell 1.4 percent to 47.19 euros as the world’s second-biggest hydropower-turbine maker said third-quarter orders declined 1.2 percent. Net income dropped 5.6 percent to 58.5 million euros, compared with the 60.4 million-euro average analyst forecast in a Bloomberg survey.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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


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