Bloomberg News

European Stocks Rise as Barclays Gains on Job-Cuts Plan

February 12, 2013

European Stocks Are Little Changed

A trader uses a telephone as she works at a brokerage in Paris. Photographer: Balint Porneczi/Bloomberg

European stocks advanced, rebounding from their slide yesterday, as cost cuts at Barclays Plc outweighed worse-than-expected earnings at Michelin & Cie.

Barclays rose to an almost two-year high after saying that it will cut 3,700 jobs. Michelin led a gauge of European auto industry-related shares lower after reporting profit that fell short of analysts’ estimates. Finmeccanica SpA dropped the most in 14 months after police arrested its chief executive officer as part of an investigation into bribery.

The Stoxx Europe 600 Index added 0.5 percent to 287.07 at the close of trading in London, after yesterday sliding 0.6 percent. The equity benchmark has advanced 2.6 percent this year as U.S. lawmakers agreed on a budget avoiding tax increases and spending cuts that had threatened to push the world’s largest economy into a recession.

“Company A says things are going well and Company B says they are cautious,” said Emmanuel Soupre, a fund manager who helps oversee $4 billion at Neuflize Private Assets in Paris. “We bounce from one to the other every day. We don’t yet have a clear idea of guidance for 2013. That doesn’t mean that the market can’t hold up.”

The volume of shares changing hands in companies listed on the Stoxx 600 was 11 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

Fiscal Policy

In the U.S., President Barack Obama delivers his State of the Union address from 9 p.m. in Washington. He will make proposals for spending on infrastructure, clean energy and education, according to an administration official briefed on the speech. Obama will argue that supporting economic growth remains the best strategy to narrow a federal budget deficit that has exceeded $1 trillion in each of the last four years.

National benchmark index rose in all 18 western-European markets. France’s CAC 40 and the U.K.’s FTSE 100 both climbed 1 percent. Germany’s DAX added 0.4 percent.

Barclays rallied 8.6 percent to 327.4 pence after saying it will cut 1,800 jobs at its investment bank and 1,900 positions at its European consumer- and business-banking unit. The second- largest U.K. lender by assets said it will reduce annual costs by 1.7 billion pounds ($2.7 billion). Barclays posted a loss of 1.04 billion pounds in 2012, its first full-year loss in 20 years.

Michelin dropped 4.3 percent to 69.55 euros after Europe’s largest tiremaker reported operating profit of 2.42 billion euros ($3.26 billion). The average analyst estimate had called for earnings of 2.52 billion euros, according to data compiled by Bloomberg. Michelin posted profit of 1.95 billion euros a year earlier. Pirelli & Cie., the region’s third-biggest tiremaker, slid 3 percent to 8.66 euros.

Finmeccanica, L’Oreal

Finmeccanica tumbled 7.3 percent to 4.41 euros after police arrested Chief Executive Officer Giuseppe Orsi and Bruno Spagnolini, the head of the Italian defense contractor’s U.S. helicopter unit. The authorities searched Orsi’s home and the Milan offices of Italy’s biggest defense company, two people familiar with the investigation said. The police are investigating the sale of 12 helicopters to India.

L’Oreal SA jumped 3.8 percent to 112.05 euros after reporting that earnings increased 12 percent in 2012. The world’s largest cosmetics maker said it will buy back 500 million euros of shares in the first half of this year. The company said it will grow faster than the beauty market in 2013.

Telenet Group Holding NV soared 4.8 percent to 37.65 euros. The Belgian cable operator controlled by Liberty Global Inc. will return 950 million euros to investors after the other shareholders blocked a plan by John Malone’s company to win full control of the unit.

Rexel Climbs

Rexel SA advanced 6 percent to 16.24 euros after saying it will refinance its debt to exploit low borrowing costs. The world’s biggest listed distributor of electrical equipment said it will save as much as 20 million euros in 2014 compared with 2013 by replacing a bond maturing in 2016 with a security with a coupon of less than 5 percent and a longer maturity.

TomTom NV sank 5.3 percent to 3.57 euros, its biggest plunge in more than six months. The chief executive officer of the Dutch supplier of maps for Apple Inc.’s iPhone 5 said he cannot predict when the company will return to growth.

France Telecom SA slipped 0.7 percent to 7.83 euros, its lowest price since October 2002, after its Polish unit, Telekomunikacja Polska SA, cut its proposed dividend for the second time in four months. Poland’s largest phone company also reported that profit slumped 86 percent in the fourth quarter.

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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