Bloomberg News

Europe Stocks Little Changed This Week on Data,Debt Talks

January 18, 2013

European stocks were little changed this week as better-than-expected economic data from China and the U.S. offset concern that debt-ceiling talks will weigh on recovering growth in the world’s biggest economy.

Delhaize Group SA (DELB) soared 13 percent as quarterly revenue climbed. JCDecaux SA advanced 11 percent after announcing a contract win. TNT Express NV tumbled 34 percent after United Parcel Service Inc. abandoned its bid for the company. PostNL NV, which holds a stake in TNT, retreated 37 percent.

The Stoxx 600 Europe Index fell less than 0.1 percent to 287.03 this week. The measure climbed to its highest level since February 2011 last week amid speculation that U.S. companies’ earnings would exceed analysts’ estimates.

“The great rotation into equities hasn’t begun yet,” Kevin Gardiner, head of investment strategy for Europe, Middle East and Africa at Barclays Plc’s wealth-management unit in London, said on Jan. 17. “Volatility will come in as we approach the debt ceiling. Investors should react to volatility as an opportunity to put long-term positions in risk assets.”

China’s economic growth accelerated for the first time in two years as government efforts to revive demand drove a rebound in industrial output and retail sales.

Gross domestic product advanced 7.9 percent in the fourth quarter from a year earlier, the National Bureau of Statistics said in Beijing on Jan. 18. That compared with the median economist estimate of 7.8 percent in a Bloomberg News survey and growth of 7.4 percent in the third quarter.

U.S. Economy

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 Jan. 16 in its Beige Book survey.

U.S. builders broke ground on more houses than forecast in December. Starts climbed 12.1 percent to a 954,000 annual rate, exceeding all forecasts in a Bloomberg survey and the most since June 2008, the Commerce Department said on Jan. 17.

The number of Americans filing first-time claims for unemployment insurance payments fell more than forecast last week. Applications for jobless benefits decreased by 37,000 to 335,000 in the week ended Jan. 12, the lowest level since the period ended Jan. 19, 2008, Labor Department figures showed.

With as little as a month until the U.S. runs out of money to pay its bills, President Barack Obama this week warned Republicans in Congress not to use the need for a debt-limit increase to force through new spending cuts.

Geithner Warning

U.S. Treasury Secretary Timothy F. Geithner said so-called extraordinary measures he’s taking to avoid breaching the debt ceiling would work only until mid-February to early March and warned that failure by Congress to raise the limit could “impose severe economic hardship” on the country.

Since 1960, Congress has raised or revised the debt limit 79 times, including 49 times under Republican presidents, according to the Treasury Department.

National benchmark indexes rose in 12 of Europe’s 18 western markets. France’s CAC 40 Index added 1 percent, the U.K.’s FTSE 100 Index advanced 0.5 percent, while Germany’s DAX Index slipped 0.2 percent.

Delhaize rallied 13 percent as the brand repositioning at its Food Lion supermarkets in the U.S. boosted sales volumes. Group revenue for the three months ended Dec. 31 increased 2.3 percent to 5.76 billion euros ($7.66 billion).

JCDecaux (DEC) jumped 11 percent. The world’s largest outdoor advertising company on Jan. 16 announced that its newly formed joint venture with Interstate Outdoor Advertising signed a 20- year partnership with the city of Chicago that will generate $700 million in advertising revenue.

Petropavlovsk Gold

Petropavlovsk Plc (POG), a miner of gold in Russia, advanced 10 percent after production exceeded its forecast, and General Nice Development Ltd., one of the largest importers of coking coal in China, and Minmetals Cheerglory Ltd., a unit of China Minmetals Corp. agreed to buy shares in its iron-ore business.

Mediaset SpA (MS) rallied 7.8 percent as analysts including those at Berenberg Bank said they expect a recovery in the advertising market to benefit the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi.

TNT slid 34 percent, the most since at least June 2011. PostNL, which holds a 29.8 percent stake in TNT, tumbled 37 percent. The two stocks posted the worst performances this week in the Stoxx 600. (SXXP) UPS, the world’s biggest package-delivery company, on Jan. 14 terminated a 5.16 billion-euro bid for TNT after the European Commission signaled it may block the deal.

Anglo American Plc (AAL) retreated 7.7 percent. The company’s platinum unit, the world’s largest miner of the metal, said this week that it may fire as many as 14,000 workers as it idles four shafts. South African Mineral Resources Minister Susan Shabangu said the company risks losing mine rights because of the plan.

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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