European Stocks Advance to 4 1/2-Year High; Serco Rallies
European stocks rose, with the Stoxx Europe 600 Index rallying to a 4 1/2-year high, amid speculation that central banks around the world will continue with measures to support economic recovery.
Standard Chartered (STAN) Plc climbed to a two-year high after reporting a record profit for the 10th consecutive year. Serco Group Plc headed for the biggest increase in more than nine years after boosting its dividend by 20 percent. Ophir Energy Plc surged the most in more than nine months after announcing a share sale. Telenet Group Holding NV fell 1.3 percent.
The Stoxx 600 jumped 1.8 percent to 294.11 at the close of trading, the highest level since June 2008. The gauge gained in February for a ninth successive month -- its longest winning streak since July 1997 -- as the European Central Bank pledged to preserve the euro and U.S. lawmakers reached a budget deal.
“After lagging for two days, European stocks and especially cyclical sectors are celebrating today,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva, which oversees about $28 billion. “On the one hand, we have a confirmation of the perspective of the Federal Reserve continuing to support the economy, while on the other hand, growth in China looks to remain strong.”
Federal Reserve Vice Chairman Janet Yellen said yesterday the U.S. central bank should press on with its $85-billion monthly bond purchases. Yellen echoed Chairman Ben S. Bernanke’s comment last week that the benefits of the Fed’s low interest rates and $3.1 trillion balance sheet outweigh any risk of financial instability.
China plans to raise its budget deficit by 50 percent this year as the government cuts taxes and boosts measures to support consumer demand in the world’s second-biggest economy. Premier Wen Jiabao set a growth target of 7.5 percent for 2013.
In the euro area, officials indicated that budget policies may be eased after a backlash against austerity plans.
Economic strains may “justify in a certain number of cases reviewing deadlines for the correction of excessive deficits,” European Union Economic and Monetary Commissioner Olli Rehn told reporters late yesterday.
National benchmark indexes climbed in all of the 18 western European markets except Greece. France’s CAC 40 rose 2.1 percent. The U.K.’s FTSE 100 gained 1.4 percent. Germany’s DAX added 2.3 percent.
Standard Chartered climbed 3.2 percent to 1,837.5 pence, the highest price since December 2010. Britain’s second-largest lender by market value said pretax profit rose to $6.88 billion from $6.78 billion a year earlier. That beat the $6.84 billion estimate of 23 analysts surveyed by Bloomberg.
Serco rallied 8.9 percent to 630.5 pence, the biggest jump since September 2003. The U.K. services company that operates prisons and London’s Docklands Light Railway posted 6 percent growth in adjusted pretax profit and increased the dividend 20 percent to 10.1 pence.
Ophir, a U.K. oil-and-gas explorer in East and West Africa, rallied 11 percent to 513 pence after announcing plans to raise about $833 million in a share sale, easing concern that funds will run out.
A gauge of European automotive companies was the second- best performer of the 19 industry groups in the Stoxx 600. This year will be another record period for the global car industry with sales increasing by 3 percent to 4 percent, Carlos Ghosn, chief executive officer of Nissan Motor Co. and Renault SA, said. The European market will decline, he added.
Fiat SpA climbed 5.9 percent to 4.14 euros. Porsche SE added 3.9 percent to 61.20 euros. Renault SA rose 3.9 percent to 49.96 euros.
Roche Holding AG, the world’s largest maker of cancer drugs, gained 1.4 percent to 218.30 Swiss francs, the highest price since October 2007. The company obtained European Union approval for its breast-cancer drug Perjeta.
Separately, Chief Executive Officer Severin Schwan confirmed the company’s 2013 sales and earnings forecasts and said he expects Roche will be able to raise its dividend for this year.
Deutsche Post AG increased 5.8 percent to 17.99 euros, the highest price since June 2008. Europe’s biggest postal service said fourth-quarter net income totaled 542 million euros ($707 million), topping the average 482 million-euro analyst forecast.
The company said it expects 2013 earnings before interest and taxes in the range of 2.70 billion euros to 2.95 billion euros. That compared with the average analyst estimate calling for 2.87 billion euros.
A gauge of mining shares was the best-performing industry group on the Stoxx 600 (SXXP) today after Glencore International Plc (GLEN) said the long-term outlook for raw materials continues to be positive.
Glencore and Xstrata Plc, set to merge by April 16, jumped 5.7 percent to 391.2 pence and 6.8 percent to 1,174 pence, respectively.
Telenet fell 52.5 cents to 38.55 euros after the Belgian cable operator said Chief Executive Officer Duco Sickinghe will step down on March 31.
Banco Popolare SC lost 2.7 percent to 1.19 euros for the biggest drop on the Stoxx 600 after saying it expects a net loss of about 330 million euros in 2012.
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