Bloomberg News

European Stocks Advance as EDF, Alcatel Rally; Barclays Retreats

July 30, 2013

European stocks advanced as investors weighed corporate earnings from Electricite de France SA to Barclays Plc and the Federal Reserve began a two-day policy meeting.

EDF, Europe’s biggest power generator, and Alcatel-Lucent (ALU) SA, a French maker of phone equipment, jumped more than 7 percent as profit beat analysts’ estimates. Barclays sank the most in 13 months after announcing a rights offering and saying income fell. K+S AG, Europe’s largest potash producer, plunged 24 percent as OAO Uralkali ended a deal that controlled supplies of the fertilizer ingredient from the former Soviet Union.

The Stoxx Europe 600 Index added 0.1 percent to 299.43 at the close of trading, as two stocks rose for every one that fell. The gauge has rallied 5.1 percent in July, heading for the biggest gain since October 2011, as the Fed said it remains flexible on the pace of asset purchases. The U.S. central bank starts a two-day meeting today and the European Central Bank and the Bank of England announce policy decisions on Thursday.

“One of the underlying messages of this earnings season is that Europe is no longer the big source of disappointment,” Graham Bishop, the London-based senior equity strategist at Exane BNP Paribas, said by telephone. “If you dig down below the headlines, it looks to me like European revenues are no longer as disappointing.”

National benchmark indexes advanced in 14 of the 18 western European markets today. Germany’s DAX and the U.K.’s FTSE 100 (UKX) added 0.2 percent, while France’s CAC 40 climbed 0.5 percent. The volume of shares changing hands in Stoxx 600 companies was 10 percent lower than the 30-day average, data compiled by Bloomberg show.

U.S. Economy

In the U.S., house prices increased by the most in more than seven years in May. The S&P/Case-Shiller index of property values climbed 12.2 percent from a year earlier after advancing 12.1 percent in April.

EDF soared 7.4 percent to 21.73 euros, the highest price since November 2011, as the company reported a 3.5 percent increase in first-half profit on cold weather. Earnings before interest, taxes, depreciation and amortization of 9.7 billion euros ($12.9 billion) beat the 9.24 billion-euro median estimate of five analysts surveyed by Bloomberg.

Alcatel-Lucent rallied 14 percent to 1.83 euros, the highest since March 2012, after reporting second-quarter sales and earnings that surpassed analysts’ estimates and saying Qualcomm Inc. agreed to buy a minority stake.

IPF Rises

International Personal Finance Plc (IPF) jumped 15 percent to 647 pence, the highest price since the company started trading on the London Stock Exchange in July 2007 after being split off from Provident Financial Plc. The home-credit business, which offers unsecured loans to low-income households in eastern Europe and Mexico, posted first-half pretax profit that beat estimates and announced a share buyback program.

Wacker Chemie AG jumped 8.3 percent to 75.19 euros, the highest since February 2012. Europe’s largest polysilicon maker posted second-quarter earnings before interest, tax, depreciation and amortization of 188.2 million euros, surpassing the 171.4 million-euro average estimate by analysts in a Bloomberg survey.

ITV Plc surged 6.3 percent to 167 pence, the highest price since the owner of the U.K.’s biggest commercial TV station started trading in February 2004, after reporting first-half sales of 1.31 billion pounds ($2 billion). That beat the 1.15 billion-pound average analyst forecast.

Rights Offering

Barclays plummeted 5.7 percent to 291.3 pence, the biggest decline since June 2012. The U.K.’s second-largest bank by assets announced plans to raise 5.8 billion pounds in a rights offering to boost capital as first-half profit slid 17 percent.

Deutsche Bank AG sank 3.9 percent to 34.50 euros after continental Europe’s biggest bank said second-quarter profit fell 49 percent. Net income in the three months through June declined to 334 million euros, missing the 767.6 million-euro average estimate of nine analysts surveyed by Bloomberg.

K+S plunged 24 percent to 20.24 euros for the biggest slide since at least 1998. Uralkali, the world’s largest potash producer, forecast global prices will fall about 25 percent as it ended limits on production and halted cooperation with Belarus that controlled supplies from the former Soviet Union.

BP Plc sank 3.4 percent to 451.45 pence. Europe’s second-biggest oil company said second-quarter earnings adjusted for one-time items and inventory changes fell to $2.7 billion from $3.6 billion a year earlier, missing the $3.4 billion average estimate of 13 analysts in a Bloomberg survey.

Rheinmetall AG tumbled 11 percent, the most since January 2009, to 35.81 euros. The maker of armored military vehicles cut its estimate for full-year operating profit at its defense unit by half as sales fell short of plans.

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

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


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