Search

Europe Stocks Gain as Finance Ministers Agree Greek Deal

By Adria Cimino
November 27, 2012 12:05 PM EST 1 Comments
Traders work on the floor of the Frankfurt Stock Exchange in Frankfurt.
Photographer: Ralph Orlowski/Bloomberg
Traders work on the floor of the Frankfurt Stock Exchange in Frankfurt.

European (SXXP) stocks advanced after euro- region finance ministers eased the terms of aid for Greece and cleared the way for a loan instalment in December.

Remy Cointreau SA, France’s second-largest distiller, surged 6.4 percent after posting first-half operating profit that beat estimates. SBM Offshore (SBMO) NV added 2.9 percent after Barclays Plc raised its recommendation on the stock. Galp Energia SGPS SA slid 5.9 percent after Eni SpA said it is selling shares in Portugal’s biggest oil company.

The Stoxx Europe 600 Index climbed 0.3 percent to 272.86 at the close of trading, paring earlier gains of as much as 0.7 percent. The gauge rallied 4 percent last week as optimism grew that the U.S. Congress will agree on a budget that avoids automatic tax increases and spending cuts, and data showed China’s manufacturing expanded.

“This was the last chance after the finance ministers kept delaying a decision,” Guillaume Chaloin, a fund manager at Meeschaert Asset Management in Paris, which oversees $3.2 billion, said, referring to the decision on Greek aid. “We’ve evacuated one of the big worries and this has reassured the market.”

European finance ministers eased the terms on emergency aid for the Mediterranean nation. In the latest bid to keep the 17- nation euro-area intact, the ministers cut the rates on bailout loans, suspended interest payments for a decade on money from the temporary rescue fund, gave the country more time to repay, and engineered a Greek bond buyback. Greece was also cleared to get a 34.4 billion-euro ($44.7 billion) loan instalment in December.

‘Difficult Deal’

“This has been a very difficult deal,” Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels after chairing a 13-hour meeting that ended early today. “All initiatives decided upon today will bring Greece’s public debt clearly back on a sustainable path.”

National benchmark indexes rose in 13 of the 18 western European markets. France’s CAC 40 Index was little changed, while Germany’s DAX Index rose 0.6 percent. The U.K.’s FTSE 100 Index gained 0.2 percent.

In the U.K., consumer spending and exports propelled the economy to its fastest growth since 2007 in the third quarter. Gross domestic product rose 1 percent from the second quarter, the same as reported on Oct. 25, the Office for National Statistics said today in London.

No revision was forecast, according to the median of 33 estimates in a Bloomberg News survey. It means Britain exited a double-dip recession in the last quarter.

Durable Goods

In the U.S., demand for goods such as machinery and electronics climbed in October by the most in five months. Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, rose 1.7 percent last month, the most since May, the Commerce Department reported today in Washington.

Orders for all durable goods were little changed, beating the median forecast of economists surveyed by Bloomberg that projected a 0.7 percent drop.

Home prices rose in the year ended in September by the most since July 2010, showing the recovery in the U.S. real estate market is a source of strength for the economy.

The S&P/Case-Shiller index of property values in 20 cities climbed 3 percent from September 2011, after advancing 2 percent in the year to August, the group said today in New York. The median forecast of 29 economists in a Bloomberg survey projected a 3 percent gain.

Consumer Confidence

U.S. consumer confidence rose in November to the highest level in more than four years. The Conference Board’s confidence index climbed to 73.7, the highest since February 2008, from a revised 73.1 reading the prior month, figures from the New York- based private research group showed today. The median forecast of economists surveyed by Bloomberg projected a reading of 73.

Federal Reserve Bank of Dallas President Richard Fisher said he advocates limits on U.S. quantitative easing.

The Fed could “pursue a different course” and announce “a limit as to how much we are going to acquire of treasuries and mortgage-backed securities, say up to a limit of X, up to a point where our balance sheet reaches that,” Fisher said in a speech today in Berlin. That could be done “perhaps at this next meeting, which would be my preference, but it is a group decision,” he said.

Fed officials plan to meet Dec. 11-12. Fisher, who doesn’t vote on policy this year, has been among the most vocal Fed officials against more easing.

Remy Cointreau

Remy Cointreau (RCO) surged 6.4 percent to 88.51 euros for the biggest gain in the Stoxx 600. The company said first-half adjusted operating profit from current operations rose to 141.5 million euros, beating analyst estimates for 137.3 million euros. Remy Cointreau said second-half growth will be more moderate than in the first half. Still, it confirmed its target to “substantially” lift annual earnings.

SBM Offshore gained 2.9 percent to 8.46 euros. Barclays raised its recommendation on shares of the oil-services company to overweight, the equivalent of a buy rating, from underweight.

Bankia SA (BKIA), the Spanish lender whose nationalization pushed the country towards a bailout for its banks, rallied 5 percent to 1.06 euros.

Carrefour SA (CA) rose 1.3 percent to 18.83 euros after Le Figaro said the world’s second-biggest retailer plans to open 24 hypermarkets in China next year and that the revenue decline in Chinese stores ended two months ago. The newspaper cited Chief Executive Officer Georges Plassat.

Oerlikon (OERL) jumped 4.3 percent to 9.47 Swiss francs. Chief Executive Michael Buscher said the sale of a solar business for 250 million Swiss francs ($269 million) may be followed by other “strategic decisions” that draw on the company’s enhanced financial strength.

Deutsche Wohnen

Deutsche Wohnen AG (DWNI), Germany’s largest residential landlord by market value, added 2.3 percent to 14.45 euros, and GSW Immobilien AG (GIB), the country’s third-largest, gained 3.6 percent to 32.13 euros, its highest since at least April 2011. Morgan Stanley lifted its recommendation on the companies’ shares to overweight, the equivalent of a buy rating.

Voestalpine AG (VOE), a steelmaker, climbed 1.4 percent to 24.29 euros after UBS AG added the shares to its most preferred list. Salzgitter AG (SZG), Germany’s second-largest steelmaker, added 2 percent to 34.82 euros.

Galp (GALP) lost 5.9 percent to 11.50 euros. Eni said late yesterday that it’s selling 49.8 million Galp shares. They are being offered at 11.48 euros to 11.73 euros apiece, according to the terms obtained by Bloomberg News.

TDC A/S (TDC) slid 4.2 percent to 37.33 Danish kroner. NTC investors raised about 2.97 billion kroner ($517 million) by selling 80 million shares in the Danish telecommunications company, a person familiar with the sale said.

Telecoms Decline

A gauge of European telecommunications stocks fell 1 percent on the Stoxx 600, for the biggest drop among the gauge’s 19 industry groups.

Moody’s Investors Service said European operators with the lowest financial flexibility are running out of options to bolster balance sheets and may have to raise equity.

The ratings company also forecast a drop in telecom sales next year of as much as 2 percent due to global economic weakness.

Royal KPN NV (KPN), a Dutch phone company, slid 5.7 percent to 4.22 euros. Telekom Austria AG (TKA) lost 3.9 percent to 5.07 euros. Telecom Italia SpA (TIT) retreated 3.2 percent to 67 euro cents.

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.

Comments
More related content »