European stocks climbed for a seventh straight week, the longest winning streak in more than six years, as better-than-expected earnings offset concern that the euro area crisis is deepening.
ASML Holding NV, Europe’s biggest semiconductor equipment maker, Akzo Nobel NV, the world’s largest paintmaker, and SEB AB all advanced this week after posting results that beat analyst estimates.
The Stoxx Europe 600 Index climbed 0.8 per cent to 258.17 this week, for the longest stretch of gains since January 2006 even after falling 1.4 per cent today. The gauge has rebounded 10 per cent from this year’s low on June 4 as central banks from Europe to China eased monetary policy to help spur economic growth.
“Investors have been given the rare opportunity to focus on companies as the earnings reporting season continued to filter through,” said Simon Reynolds, a fund manager at Octopus Investments in London. “Upbeat US earnings have helped lift equity markets.”
Of the 46 companies on the Stoxx 600 that have reported earnings this quarter, 48 per cent beat forecasts, according to data compiled by Bloomberg. On the Standard & Poor’s 500 Index, 73 per cent of the 118 companies that have reported quarterly earnings have topped analyst estimates, the data show.
National benchmark indexes rose in 11 of the 18 western European markets this week. Germany’s DAX rallied 1.1 per cent, France’s CAC 40 advanced 0.4 per cent and Switzerland’s SMI gained 1.7 per cent. The U.K.’s FTSE 100 lost 0.3 per cent, while Spain’s IBEX 35 fell 6.3 per cent and Italy’s FTSE MIB retreated 4.7 per cent.
Friday decline
European stocks dropped on Friday, paring their weekly advance, as the yield premium for Spanish benchmark bonds over German bunds surged to a record. Spanish bonds declined, pushing the extra yield investors demand to hold the nation’s 10-year securities instead of similar-maturity German bunds to the most on record.
Spain’s recession will extend into next year as the region of Valencia prepared to seek a rescue from the central government and European finance ministers approved the bailout of Spanish banks, Budget Minister Cristobal Montoro said after the Cabinet met today in Madrid. Gross domestic product will fall 0.5 per cent in 2013 instead of rising 0.2 per cent as the government predicted April 27, Montoro said.
ASML surged 9.7 per cent after the chipmaker said second- quarter net bookings climbed 9.8 per cent and that technological advances will boost business in the longer term.
Akzo Nobel jumped 10 per cent. The company reported second- quarter earnings ahead of analyst forecasts as Chief Executive Officer Ton Buechner drives ahead with a revamp to improve profitability.
SEB, Nordea
SEB, the second-largest lender in the Baltic countries, and Nordea Bank AB, the Nordic region’s biggest bank, also reported earnings that topped analysts’ estimates. The shares gained 8 per cent and 2.1 per cent respectively.
Remy Cointreau SA increased 6.1 per cent in Paris as France’s second-biggest distiller reported an increase in first- quarter sales that also topped projections.
CSR Plc surged 37 per cent after Samsung Electronics Co. agreed to buy its wireless technology unit for $US310 million.
Homeserve Plc jumped 17 per cent after the emergency-repair provider said it was on track to reach its full year customer targets for the U.K. Shares surged on Wednesday after the Daily Telegraph reported the company had been approached by private-equity buyers. Homeserve said in a statement that it isn’t in any discussions which could lead to a possible offer.
Credit Suisse
Credit Suisse Group AG, Switzerland’s second-biggest bank, fell 1.5 per cent as concern about the euro-area debt crisis saw the yield premium for Spanish benchmark bonds over German bunds surging to a record.
The lender climbed earlier in the week after posting an increase in second-quarter net income and announcing measures to cut costs and boost capital by 8.7 billion Swiss francs ($US8.9 billion).
HSBC Holdings Plc dropped 4.8 per cent as the bank’s head of group compliance, David Bagley, told a US Senate hearing he would step down as lawmakers probe whether the bank broke anti- money laundering rules.
Executives at Europe’s biggest lender were questioned by the Senate’s Permanent Subcommittee on Investigations over claims that bank affiliates gave terrorists, drug cartels and criminals a portal into the US financial system by failing to guard against money laundering.
HSBC is also among banks that are being investigated for involvement in allegedly manipulating Libor rates.
Nokia slides
Nokia slid 5.8 per cent as the unprofitable mobile-phone maker’s debt, already at junk status at the three biggest rating companies, was lowered further by two steps at Fitch Ratings after its second-quarter loss widened.
The long-term rating was cut to BB- from BB+ with a negative outlook, Fitch said in a statement today. Nokia yesterday reported an operating loss at its handset division equivalent to 9.1 per cent of revenue adjusted for some items and forecast similar losses for the current period.
Puma SE dropped 2.1 per cent after Europe’s second-largest sporting-goods maker cut its forecasts for sales and profit growth in 2012.
Alcatel-Lucent SA plunged 23 per cent to its lowest level since March 2009 after posting a second-quarter loss on waning demand. France’s largest telecommunications equipment supplier also said it expects to miss a 2012 profitability target.
In the U.K., G4S Plc sank 13 per cent as the world’s biggest security company said it may incur a 50 million-pound ($US78 million) loss after failing to provide enough guards for the Olympic Games.
Cove Energy Plc lost 13 per cent after Royal Dutch Shell Plc pulled out of the race for the East Africa-focused explorer, leaving Thailand’s PTT Exploration & Production Pcl as the sole bidder.
Bloomberg
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