Bloomberg News

European Stock Futures Rise as Evans Backs Stimulus

January 14, 2013

European (SXXP) stock futures rose after Federal Reserve Bank of Chicago President Charles Evans said the central bank should continue to support economic recovery. U.S. index futures and Asian shares excluding Japan also climbed.

Swatch Group AG (UHR) may advance after saying it is buying the Harry Winston watch and jewelry brand for about $1 billion. Volkswagen AG may move after posting a 25 percent increase in 2012 China sales. Assicurazioni Generali SpA (G) may be active after announcing a plan to cut costs by 600 million euros ($803 million). TNT Express NV (TNTE) may decline after United Parcel Service Inc. said it expects regulators to block its takeover of TNT.

Futures on the Euro Stoxx 50 Index, a benchmark for the euro area, added 0.5 percent to 2,725 at 7:34 a.m. in London. Contracts on the U.K.’s FTSE 100 Index gained 0.3 percent. Futures on the Standard & Poor’s 500 Index expiring in March climbed 0.2 percent and the MSCI Asia Pacific Excluding Japan Index advanced 0.4 percent.

“Despite the Federal Open Market Committee minutes earlier this month giving traders a shock reminder that the unlimited quantitative easing wasn’t a permanent monetary policy and may one day end, Evans reassured traders that the policy would remain in place until well after the economy got back on track to self sustainability,” Jonathan Sudaria, a trader at Capital Spreads in London, wrote in a note.

The Stoxx Europe 600 Index, the region-wide benchmark, fell last week amid the highest valuation in 11 quarters and concern that quickening inflation in China will limit the scope for economic stimulus. Even so, the gauge has rallied 2.7 percent since the New Year as U.S. lawmakers reached a budget compromise, avoiding a fiscal crisis.

Moving Slowly

The U.S. government should put “in place policies that slowly but surely bring the prospects of future revenues into balance with future spending,” Evans said in remarks in Hong Kong today. “Under this scenario, monetary policy has an important contribution to make.”

FOMC minutes, released Jan. 3 in Washington, showed a split on how long the $85 billion monthly bond-purchase program should last. Members were evenly divided between those who backed ending the purchases by mid-2013 and those in favor of continuing further.

Swatch may be active after agreeing to buy the Harry Winston brand. The world’s biggest maker of Swiss watches will pay Harry Winston Diamond Corp. $750 million and assume as much as $250 million in debt, the Biel, Switzerland-based company said in a statement.

Volkswagen Sales

Volkswagen AG (VOW), Europe’s largest carmaker, may be active after it said 2012 sales in China rose by 25 percent to 2.81 million vehicles. Overall, full-year deliveries rose by 11 percent to 9.07 million vehicles.

Assicurazioni Generali may move. Italy’s biggest insurer said it plans to save 600 million euros in costs by the end of 2015.

TNT may decline. UPS said it expects European Commission antitrust regulators to block its proposed 5.16 billion-euro takeover of TNT. UPS will pay TNT 200 million euros and withdraw the offer if the regulators prohibit it, the Atlanta-based company said. The decision is expected to be formally adopted in coming weeks, UPS added.

Nokia Oyj (NOK1V), the Finnish mobile-phone maker struggling to reverse falling sales, may move. The stock was cut to underweight, a rating similar to sell, from equal weight at Barclays.

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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