Bloomberg News

European Stocks Rise on German Confidence, Black Friday

November 23, 2012

European Stocks Decline, Paring Weekly Gain; EADS Shares Retreat

The German government will buy shares in EADS from France, Handelsblatt reported, citing unidentified German government sources. Photographer: Balint Porneczi/Bloomberg

European stocks climbed, with the benchmark index completing its biggest weekly gain in almost a year, as German business confidence rose and investors watched Black Friday sales to gauge prospects for U.S. holiday shopping.

Outotec Oyj surged 6.3 percent after predicting an increase in its operating-profit margin in 2013. European Aeronautic, Defence & Space Co. (EAD) declined 1.4 percent after a report that Germany will buy shares in the world’s largest maker of civil aircraft from France.

The Stoxx Europe 600 Index (SXXP) added 0.6 percent to 273.33 in London. The gauge jumped 4 percent this week, the most since Dec. 2, as U.S. and Chinese data added to signs the global economy is on the mend and optimism grew that American lawmakers will reach a budget compromise.

“Investors are, amid a bullish sentiment, buying stocks into the weekend as the holiday shopping season begins,” said Manish Singh, who helps manage $2 billion as head of investment at Crossbridge Capital in London. “Positive news from China this week and German data this morning are supporting the positive risk tone we’ve seen in the last couple of days.”

The volume changing hands on Stoxx 600 companies was 28 percent lower than the 30-day average, according to data compiled by Bloomberg.

Business Sentiment

The Munich-based Ifo institute said its business climate index for Germany, based on a survey of 7,000 executives, climbed to 101.4 in November from 100 in October. Economists in a Bloomberg survey predicted a drop to 99.5. French business confidence increased from the lowest in more than three years this month, a separate report showed.

“When Germany is doing well, that is positive for all of Europe,” said Pierre Mouton, a fund manager who helps oversee $6 billion at Notz Stucki & Cie. in Geneva. “This confirms our view. We are relatively optimistic.”

Stocks extended gains as post-Thanksgiving sales got under way in what is known as Black Friday in the U.S. It is traditionally the beginning of the holiday shopping season, when retailers lure customers with deep discounts. The name recalls a time when U.S. retailers would use the day to make a big part of their annual profit, and income statements would go to black from red.

National benchmark indexes climbed in 16 of the 18 western European markets. France’s CAC and Germany’s DAX both advanced 0.9 percent. The U.K.’s FTSE 100 rose 0.5 percent.

Greek Rescue

Euro-area finance ministers will hold an emergency meeting in Brussels on Nov. 26 to discuss unlocking the next installment of aid to Greece. Their meeting this week failed to produce a decision as creditors led by Germany refused to bring fresh money or offer debt relief.

Divisions between rich and poor countries flared over the European Union’s next seven-year budget, leading German Chancellor Angela Merkel to rule out an accord until the new year.

“Positions remain too far apart,” Merkel told reporters early today after the first session of a summit in Brussels. “Probably there will be no result at the end of this summit. There may be some progress but it is probable that we will need to meet again at a second stage.”

Outotec Margin

Outotec (OTE1V) jumped 6.3 percent to 39.06 euros, the biggest gain since Sept. 14. The Finnish maker of mining machinery said its sales and operating margin will increase in 2013, driven by a strong order book, the current market outlook and customer tendering activity. The company also said it aims to raise its services revenue to 1 billion euros per year by the end of 2017.

Iliad SA (ILD), the mobile operator that drove prices down in France with a 2-euros-a-month offering, climbed 4.1 percent to 133.65 euros, the highest since it sold shares to the public in 2004. Morgan Stanley upgraded the stock to overweight, a recommendation similar to buy, from equal weight.

Valeo SA (FR), France’s second-biggest car-parts maker, gained 3.4 percent to 35.45 euros. The stock was raised to buy from neutral at Goldman Sachs Group Inc.

Arkema SA (AKE) rose 2.4 percent to 76.67 euros after Chief Executive Officer Thierry Le Henaff said he expects demand in China to grow at a good pace after the Chinese new year.

Chemical makers advanced 1.4 percent, for the second- biggest gain among the 19 industry groups in the Stoxx 600.

EADS Stake

EADS dropped 1.4 percent to 24.90 euros, the lowest since Sept. 28. The German government will buy shares in EADS from France, Handelsblatt reported, citing unidentified German government sources. German, and French governments aim to have 12 percent ownership each in EADS, while Spain will hold a 5 percent stake, according to Handelsblatt.

Amadeus IT Holding SA (AMS) lost 2.6 percent to 18.00 euros, falling for the eighth day. HSBC Holdings Plc owns more than 400 million euros ($515 million) of Amadeus IT Holding shares after failing to find buyers for a stake in the travel reservations company. HSBC, which attempted to place a block of Amadeus shares last week, holds 5.4 percent of the company, the bank said in a filing to the Spanish financial regulator this week.

Fraport AG, owner of the Frankfurt airport, retreated 2.3 percent to 42.60 euros. The stock was cut to underweight, the equivalent of sell, from neutral at HSBC Holdings Plc.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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


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