Bloomberg News

European Stocks Rise on Italy President, BOJ Stimulus

April 22, 2013

European stocks rose, rebounding from the biggest weekly drop in five months, as Italy elected a president and the Group of 20 refrained from opposing the Bank of Japan’s stimulus policies.

UniCredit SpA climbed 2.7 percent as Italy’s two-year bond yield declined to a record low. Delhaize (DELB) Group SA surged to a 17-month high as the Belgian retailer’s profit beat estimates. Royal Philips Electronics NV (PHIA) slid for a seventh day after earnings missed projections.

The Stoxx Europe 600 Index (SXXP) advanced 0.2 percent to 285.68 at the close of trading. The benchmark gauge pared an earlier gain of as much as 0.9 percent as U.S. home sales unexpectedly fell. The measure retreated 2.5 percent last week as economic data from the U.S. to China missed forecasts. It has still risen 2.2 percent this year.

“There’s some relief since the worst case was avoided in Italy, but political stability is still wishful thinking,” said Witold Bahrke, who helps oversee $55 billion as senior strategist at PFA Pension A/S in Copenhagen. “When Europe suffers and Asia weakens, markets hope that the U.S. will keep the global economy afloat, therefore these U.S. macro data are increasingly in focus. Longer term the U.S. housing market is still a bright spot, but short term it cannot defy gravity.”

National benchmark indexes climbed in 11 of the 18 western European markets. Germany’s DAX rose 0.2 percent, while Italy’s FTSE MIB Index (FTSEMIB) rallied 1.7 percent to a one-month high. The U.K.’s FTSE 100 slipped 0.1 percent. The volume of shares changing hands in Stoxx 600 companies was 8.8 percent less than the 30-day average, according to Bloomberg data.

Yield Record

Italian bonds advanced, pushing the yield on the two-year notes to as little as 1.208 percent, the lowest since Bloomberg began compiling the data in 1993.

Giorgio Napolitano was elected to a second term as Italy’s president after accepting a last-minute appeal from party leaders to run again. The 87-year-old incumbent won the backing of parties led by former premier Silvio Berlusconi, caretaker Prime Minister Mario Monti and outgoing Democratic Party leader Pier Luigi Bersani.

His re-election came after the country’s divided Parliament failed to agree on a candidate in the first five rounds of voting, an impasse that led Bersani to resign. Italy has yet to form a new government eight weeks after inconclusive elections.

Bank of Japan Governor Haruhiko Kuroda emerged from last week’s G-20 meeting saying he was emboldened to press on with the campaign to defeat deflation. The central bank meets this week after pledging April 4 to double the monetary base.

House Sales

In the U.S., purchases of previously owned houses fell 0.6 percent to a 4.92 million annual rate last month, figures from the National Association of Realtors showed. The median forecast of 75 economists surveyed by Bloomberg projected sales would increase to a 5 million rate.

UniCredit, Italy’s largest lender, gained 2.7 percent to 3.73 euros. Banco Popolare SC, the fourth-biggest bank by assets, rose 4.5 percent to 1.10 euros. Mediobanca SpA, the nation’s largest publicly traded investment bank, added 2 percent to 4.67 euros.

Assicurazioni Generali SpA (G), Italy’s biggest insurer, added 5.2 percent to 13.48 euros, the highest price since Feb. 1. The stock was upgraded to overweight, a rating similar to buy, from equal weight at Barclays Plc, which said the company may raise its dividend this year.

Delhaize Rallies

Delhaize soared 11 percent to 47.16 euros, the highest since November 2011. First-quarter operating profit before one- time items rose 13 percent to 214 million euros ($279 million), the Brussels-based company said. Analysts had projected a decline to 175 million euros, according to the average of 17 estimates published on its website. Comparable sales in the U.S. gained 1.9 percent, the most in six quarters.

SMA Solar Technology AG, Germany’s biggest solar-energy company by market value, surged 4.7 percent to 18.32 euros after ABB Ltd. (ABBN) agreed to buy U.S. peer Power-One Inc. for about $1 billion. Meyer Burger Technology AG, which supplies machinery to solar-panel makers, advanced 3.7 percent to 7.37 Swiss francs.

Randgold Resources Ltd., a miner of the precious metal in Africa, jumped 4.4 percent to 4,870 pence as gold prices increased for a fifth day.

Philips slid 5.2 percent to 20.54 euros, the biggest drop since May 2012. First-quarter earnings before interest, taxes, amortization and one-time items were 421 million euros, the world’s largest lighting manufacturer said, missing estimates of 441 million euros. Sales dropped 0.9 percent to 5.26 billion euros, trailing the 5.48 billion-euro analyst projection.

Watchmakers Fall

Cie. Financiere Richemont SA, the owner of the Cartier brand, fell 1.5 percent to 68.15 francs. Swatch Group SA, the biggest maker of Swiss watches, dropped 1.4 percent to 511.50 francs. French peer Hermes International SCA said in a statement that watch sales declined 5.3 percent as the Chinese market slowed at the start of the year.

Still, Hermes added 1.1 percent to 251.55 euros as the maker of Kelly handbags said overall sales rose 10 percent to 856.8 million euros, beating the average analyst estimate of 854 million euros.

Paddy Power Plc (PWL), Ireland’s largest bookmaker, sank 5.7 percent to 61.50 euros in Dublin trading, the biggest drop since July 2011. Davy cut its rating on the stock to underperform from outperform, citing concerns over the company’s entry into the “faltering” Italian market and its exposure to the U.K.

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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