Bloomberg News

European Stocks Rise on Euro-Area Manufacturing, Services

July 24, 2014

European stocks rose for a third day as manufacturing gains in China and the euro area boosted investors’ confidence that the economic recovery is on track.

Nokia Oyj jumped to a three-year high after it posted second-quarter earnings that topped estimates. Danske Bank A/S rallied the most since August after raising its annual earnings projection. BASF SE fell 1.5 percent as earnings trailed analysts’ predictions. EasyJet Plc dropped 5 percent after saying fares out of London are under pressure.

The Stoxx Europe 600 Index climbed 0.4 percent to 344.33 at the close of trading. The equity gauge added 1.9 percent in the last three days amid better-than-estimated corporate earnings. The volume of shares changing hands in Stoxx 600-listed companies was 8.3 percent greater than the 30-day average, according to data compiled by Bloomberg.

“Company earnings are coming good,” Herbert Perus, who helps oversee $36 billion as head of equities at Raiffeisen Capital Management in Vienna, said on phone. “If you look at Nokia, for instance, the figures are good and the stock is up.”

Euro-area manufacturing and services activity strengthened in July in a sign that a recovery in the 18-nation region is gathering pace. A combined purchasing managers index for both industries jumped to 54 this month from 52.8 in June, matching a three-year high reached in April, Markit Economics said. Economists in a Bloomberg News survey had predicted an unchanged reading of 52.8. Numbers above 50 indicate expansion.

Manufacturing Data

A manufacturing gauge in China rose to an 18-month high in July, adding to signs the economy will meet its 2014 growth target of about 7.5 percent. A preliminary PMI from HSBC Holdings Plc and Markit Economics came in at 52, compared with the median estimate of 51 and a final reading of 50.7 in June.

National benchmark indexes rose in 14 of the 18 western-European markets today. France’s CAC 40 climbed 0.8 percent, while Germany’s DAX added 0.4 percent and the U.K.’s FTSE 100 gained 0.3 percent.

Nokia jumped 7.3 percent to 6.14 euros, its highest price since May 2011. The Finnish network-equipment maker that sold its mobile-phone business to Microsoft Corp. posted second-quarter earnings excluding some items of 6 euro cents a share. Analysts surveyed by Bloomberg had predicted 4.5 cents.

Danske Outlook

Danske Bank A/S advanced 4.6 percent to 162.90 kroner, its highest price since April 2008. Scandinavia’s second-largest lender said net income will rise to as much as 13 billion kroner ($2.3 billion) in 2014. That compares with a forecast in May for as much as 12 billion kroner.

A gauge of lenders posted the biggest gain among 19 industry groups on the Stoxx 600. Banca Popolare dell’Emilia Romagna SC advanced 6.2 percent to 6.76 euros after Kepler Cheuvreux recommended buying the stock. Banco Comercial Portugues SA climbed 8.1 percent to 12.2 euro cents after Banco de Sabadell SA raised its stake to 5.53 percent. Banco de Sabadell added 4 percent to 2.53 euros.

Logitech International SA jumped 15 percent to 13.90 Swiss francs for its biggest rally in six months. The world’s biggest maker of computer mice raised its full-year 2015 guidance for operating income not based on Generally Accepted Accounting Principles to about $170 million from $145 million.

Dassault, Howden

Dassault Systemes SA added 5.2 percent to 49.46 euros. The French developer of three-dimensional design software reported a 15 percent increase in revenue not based on International Financial Reporting Standards.

Howden Joinery Group Plc surged 17 percent to 364.9 pence, its biggest advance in five years. The kitchen manufacturer said improved trading conditions continued in the first half of the year. Operating profit increased to 57.6 million pounds ($97.9 million) from 44.2 million pounds.

BASF fell 1.5 percent to 82.35 euros. The world’s biggest chemical maker reported a 12 percent increase in earnings before interest, taxes and one-time items to 2.05 billion euros ($2.76 billion) in the second quarter, missing estimates of 2.09 billion euros. The company said it stands by its target of achieving a “slight increase” in profit this year.

EasyJet Plc lost 5 percent to 1,333 pence. Europe’s second-biggest discount airline said the addition of capacity at London’s Gatwick airport has put fares under pressure. The company projected a 1 percent annual gain in per-seat revenue in the second half of the year. Jefferies International analyst Mark Irvine-Fortescue said the forecast is disappointing.

Technip SA (TEC) tumbled 8.7 percent to 71 euros. Europe’s largest oilfield-services provider by market value said energy companies are putting pressure on suppliers to lower costs and said Russian sanctions may hurt profit margins.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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


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