Bloomberg News

European Stocks Rise on Retailer Rally, U.S. Housing Data

January 17, 2013

European stocks gained the most in a week as retailers climbed on increased revenue and U.S. housing starts jumped more than forecast to a four-year high.

Carrefour SA, France’s biggest retailer, Delhaize Group SA, the Belgian owner of Food Lion supermarkets, and Associated British Foods Plc (ABF) advanced more than 3 percent. Petropavlovsk Plc surged the most in four months after the gold producer reported better-than-forecast output. SAP AG fell 1.5 percent as Citigroup Inc. lowered its recommendation on the shares.

The Stoxx Europe 600 Index (SXXP) rose 0.5 percent to 287.35 at the close of trading, the biggest increase since Jan. 9. The measure has rallied 2.7 percent this year after U.S. lawmakers agreed on a budget that avoided most tax increases and spending cuts, extending the advance from its June 4 low to 23 percent.

“This is further confirmation that the market is recovering in many regions of the U.S.,” said Michael Morris, who oversees $1 billion as head of European equities at Mitsubishi UFJ Asset Management in London. “It’s another sign that we are in an upward phase. For some time now, there have been positive signs and we are well past a trough.”

The volume of shares changing hands in Stoxx 600 companies today was 6.7 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

The U.S. economy picked up across much of the country last month, boosted by auto and home sales, even as the outlook for unemployment showed few signs of improvement, the Federal Reserve said late yesterday in its Beige Book business survey.

U.S. Houses

U.S. builders broke ground on more houses than forecast in December, capping the best year for the industry since 2008. Starts climbed 12.1 percent last month to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey of economists and the most since June 2008, the Commerce Department said today.

The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week to 335,000, the lowest level in five years, Labor Department figures showed.

“The U.S. economy will progressively improve in the course of 2013,” Tim Harris, who manages about $25 billion as chief investment officer at Lloyds TSB Private Banking Ltd. in London, said in a Bloomberg TV interview with Manus Cranny. “There will be better market conditions.”

Of the 52 companies in the Standard & Poor’s 500 Index to have reported results since Jan. 8, 71 percent beat analysts’ earnings estimates, according to data compiled by Bloomberg.

National benchmark indexes climbed in all of the 18 western European markets, except Iceland. The U.K.’s FTSE 100 and Germany’s DAX (DAX) advanced 0.5 percent and 0.6 percent, respectively. The Swiss Market Index surged 1.7 percent to the highest level since June 2008.

Carrefour Climbs

Carrefour jumped 6.1 percent to 20.50 euros, the biggest gain since August. The retailer reported a 0.8 percent increase in fourth-quarter sales because of growth in Latin America, and said business continued to improve in France.

Delhaize surged 10 percent to 35.23 euros, the largest advance since March 2009. The company said its U.S. unit had the best quarterly performance since 2006, spurring organic revenue growth of 2.5 percent for the whole company.

AB Foods gained 3.2 percent to 1,606 pence, the highest price since at least 1986, after saying first-quarter revenue increased 10 percent. The owner of the discount-clothing Primark chain said sales at the unit surged 25 percent.

Petropavlovsk surged 8.9 percent to 403.3 pence, the biggest rally since Sept. 14. The miner of gold in Russia said 2012 output rose 13 percent to 710,400 ounces, beating its 700,000-ounce guidance.

Remy Cointreau

Remy Cointreau SA increased 3.8 percent to 91.78 euros after third-quarter organic revenue rose 0.5 percent, compared with estimates in a Bloomberg survey of analysts for a 0.6 percent decline. The company, which produces the Remy Martin cognac, also said cognac sales increased 1.7 percent.

European Aeronautic, Defence and Space Co. added 3.9 percent to 33.70 euros, the highest price in 6 1/2 years, as the maker of the Airbus aircraft said list prices rose. Separately, U.S. regulators grounded rival Boeing Co.’s 787 Dreamliner after an emergency landing by one of the planes in Japan.

Veolia Environnement SA rose 3.2 percent to 8.88 euros, its biggest gain in five weeks. Chief Executive Officer Antoine Frerot said the world’s largest water company is ahead in a two- year plan to cut debt, costs and sell assets.

SAP declined 1.5 percent to 58.13 euros after Citigroup lowered its recommendation on the stock to neutral from buy. The shares fell the most in six months on Jan. 15 as the world’s biggest maker of business-management software reported fourth- quarter earnings that trailed analysts’ estimates.

To contact the reporter on this story: Sofia Horta e Costa in London at shortaecosta@bloomberg.net

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


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