Bloomberg News

Europe Stocks Little Changed as Investors Weigh Earnings

July 23, 2014

European stocks were little changed, as investors considered earnings from companies including Akzo Nobel NV (AKZA) and GlaxoSmithKline Plc, while a measure of consumer confidence unexpectedly declined.

Akzo Nobel rose 3.9 percent after reporting better-than-expected second-quarter profit. Outotec Oyj surged the most in more than two years amid reports that Weir Group Plc may be interested in buying the mining-equipment maker. GlaxoSmithKline dropped 4.7 percent after posting second-quarter earnings that missed analyst estimates. Deutsche Bank AG (DBK) fell after the Wall Street Journal said that bank overseers faulted some of the firm’s U.S. businesses last year.

The Stoxx 600 added 0.1 percent to 342.86 at the close of trading, paring earlier gains of as much as 0.4 percent. The equity gauge advanced 1.3 percent yesterday, rebounding from three days of losses, as companies from Actelion Ltd. to ARM Holdings Plc predicted improved financial results.

“You’ve had some very good earnings released so far,” said Peter Garnry, head of equity strategy at Saxo Bank A/S in Hellerup, Denmark. “The focus has shifted quickly to economic data from Europe and the U.S. It’s been mixed but still slightly to the upside. When we look across the market, it seems calm and the macro picture is still supporting equities.”

Data this month showed euro-area retail sales increased in May from a year earlier, while car registrations climbed in June. In the U.S., a report showed the number of Americans filing applications for unemployment benefits fell in the week ended July 12.

Confidence Falls

Still, shares pared gains after a report showed euro-area consumer confidence unexpectedly fell in July. An index of household confidence in the 18-nation euro zone decreased to minus 8.4 from minus 7.5 in June, the European Commission in Brussels said in a preliminary release. That fell short of the median forecast of minus 7.5 in a Bloomberg News survey.

National benchmark indexes rose in 15 of the 18 western-European markets. France’s CAC 40 advanced 0.2 percent, Germany’s DAX increased 0.2 percent, and the U.K.’s FTSE 100 added less than 0.1 percent.

The European Union is weighing limiting Russia’s access to capital markets. Two planes carrying bodies from flight MH17 left eastern Ukraine today for the Netherlands. The U.S. has indicated it believes Russia supplied the missile that downed the Malaysia Airlines jet last week, killing all 298 people on board.

Russia’s Ambassador to Malaysia, Lyudmila Vorobyeva, told reporters in Kuala Lumpur that her country played no role in the attack and Ukrainian separatists don’t have the required long-range anti-aircraft weapons.

Akzo Nobel

Akzo Nobel rose 3.9 percent to 54.23 euros. Europe’s largest paintmaker said second-quarter operating profit rose 10 percent to 353 million euros ($475 million), driven by demand for household coatings in Asia and parts of Europe. Analysts had estimated 340 million euros.

Outotec (OTE1V) surged 7.5 percent to 8.21 euros. Weir may consider buying the Finnish company after it failed in a bid for mine-equipment supplier Metso Oyj earlier this year, according to newspapers including the Daily Mail, which said Weir could offer 12 euros a share.

Outotec said in a statement that it would evaluate any takeover proposal thoroughly. It has not been approached regarding any takeover or combination, it also said.

Espirito Santo

Banco Espirito Santo SA soared 14 percent to 47.8 euro cents. The lender, which has slumped since disclosing accounting irregularities at an affiliated company, rose the most in a week after Goldman Sachs Group Inc. (GS:US) and D.E. Shaw & Co. bought its shares.

Telenor ASA added 2.5 percent to 148.10 kroner. The Nordic region’s largest phone company forecast this year’s profit margin to improve as it reported second-quarter earnings that topped analysts’ estimates.

Banco Comercial Portugues SA rallied 8.8 percent to 11.3 euro cents. The lender said late yesterday that its capital increase was fully subscribed, with demand at about 126 percent of the rights offering.

GlaxoSmithKline (GSK) dropped 4.7 percent to 1,481.5 pence. The U.K.’s biggest drugmaker posted second-quarter earnings that missed analyst estimates as sales of its respiratory drugs in the U.S. remained sluggish. The company also cut its forecast for the year.

Deutsche Bank

Deutsche Bank lost 0.7 percent to 26.48 euros, paring losses of as much as 2.8 percent. The Wall Street Journal said that bank overseers faulted some of the German lender’s U.S. businesses last year for “inaccurate and unreliable” financial reports. A Federal Reserve Bank of New York review of the company’s U.S. operations also found they suffered from inadequate oversight and auditing, as well as weak technology, the newspaper said, citing documents it reviewed.

STMicroelectronics NV (STM) fell 5.8 percent to 6.56 euros. Europe’s largest semiconductor maker reported an 8.9 percent decline in second-quarter revenue to $1.86 billion, even as it posted its first profit in 11 quarters.

Corio NV retreated 2.2 percent to 36.27 euros. UBS AG cut its rating on the Dutch property investor to sell from neutral, saying that the performance of its core portfolio has been under pressure and lagging peers.

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

To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Alan Soughley


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Companies Mentioned

  • GS
    (Goldman Sachs Group Inc/The)
    • $183.98 USD
    • 0.81
    • 0.44%
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