Bloomberg News

European Stocks Little Changed on Debt Sales, Draghi

February 07, 2013

European stocks were little changed as France and Spain sold debt, while European Central Bank President Mario Draghi said that economic recovery should begin later this year amid a continued accommodative policy.

Vodafone Group Plc contributed the most to gains by a gauge of telecommunications shares after reiterating its forecast for the year through March. Banca Monte dei Paschi di Siena SpA advanced for a third day. DNB ASA climbed to its highest price since June 2011 after increasing its dividend. Sanofi dropped to its lowest price since November after saying that profit may retreat this year.

The Stoxx Europe 600 Index slipped 0.2 percent to 283.88 at the close of trading, after earlier rallying as much as 0.6 percent. The equity benchmark has gained 1.5 percent this year as U.S. lawmakers agreed on a compromise federal budget. The gauge has fallen 1.5 percent this week amid signs of political uncertainty returning to Italy and Spain.

“After the recent resurgence of the tensions in Europe, Draghi had to reassure the markets, both on the macro-economic side and on a personal level, answering questions about the Monte Paschi case,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva, which oversees about $28 billion. “He did this successfully. He hinted at continued accommodative policy to support the economy and that’s a positive element markets have been yearning for this week.”

The number of shares changing hands in companies listed on the Stoxx 600 was 24 percent greater than the average of the last 30 days, data compiled by Bloomberg showed.

Rate Decisions

The ECB left its benchmark rate at a record low of 0.75 percent following a meeting of policy makers in Frankfurt today. That matched every forecast in a Bloomberg News survey.

Draghi said the combined economy of the 17 nations that use the euro will begin to recover later this year because the absence of inflation risks will allow the ECB to leave interest rates at their record low.

In the U.K., Bank of England officials refrained from adding further stimulus to aid the economy and held its interest rate unchanged at 0.5 percent. The BOE panel led by the current governor, Mervyn King, left its target for bond purchases at 375 billion pounds ($588 billion). All 43 economists in a Bloomberg survey had forecast no change.

France sold 7.98 billion euros ($11 billion) of government debt and Spain raised more than its maximum target at a bond auction. Yields climbed, compared with the most recent sales.

National benchmark indexes declined in 12 of the 18 western-European markets today. Germany’s DAX advanced 0.1 percent, while the U.K.’s FTSE 100 fell 1.1 percent. France’s CAC 40 lost 1.2 percent, erasing its gain for the year.

Vodafone, DNB

Vodafone gained 0.9 percent to 171.9 pence after the world’s second-biggest mobile-phone operator repeated its forecast that adjusted operating profit for the year through March will be in the upper half of a range of 11.1 billion pounds to 11.9 billion pounds. Analysts had estimated 11.6 billion pounds.

Banca Monte dei Paschi rallied 4.1 percent to 24 euro cents. The Italian bank engulfed by investigations into its former managers will take a 730 million-euro hit to its assets after accounting for structured deals that hid earlier losses.

DNB surged 7.3 percent to 81.30 kroner, posting the best performance on the Stoxx 600. Norway’s largest lender reported net income of 3.81 billion kroner ($689 million), exceeding the 3.32 billion-krone average of 15 analyst estimates compiled by Bloomberg. The company also proposed a dividend for 2012 of 2.1 kroner a share, or 25 percent of its earnings a share and an increase of 5 percent from 2011.

Sanofi Slips

Sanofi declined 4 percent to 66.60 euros after projecting that earnings per share may drop as much as 5 percent this year as generic competition to its Plavix blood thinner limits revenue in the U.S. Analysts surveyed by Bloomberg had predicted that earnings would slip 0.2 percent.

Alcatel-Lucent SA climbed 4.9 percent to 1.23 euros after its chief executive officer announced he will leave. The stock earlier rallied as much as 11 percent, as Chief Executive Officer Ben Verwaayen stepped down after his 4 1/2-year-long attempt to turn around the phone-equipment maker failed. The company reported a fourth-quarter net loss of 1.37 billion euros and as it booked a one-off impairment charge of 1.4 billion euros. Verwaayen will remain in place until the board finds a replacement.

Daimler AG gained 2.8 percent to 44.21 euros after the world’s third-biggest maker of luxury vehicles forecast that group revenue and deliveries of Mercedes-Benz cars will increase in 2013.

Burberry Group Plc slid 6.5 percent to 1,337 pence as the U.K.’s largest luxury-goods maker replaced its chief financial officer. Stacey Cartwright, who has held the post for more than nine years, will step down in July. Carol Fairweather will take over from Cartwright, while John Smith will take on the new position of chief operating officer.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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


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