European stocks rose for a third week, their longest winning streak since April, on speculation that policy makers will increase efforts to contain the debt crisis as company earnings and US retail sales beat estimates.
Carmakers and chemical companies led gains over the week, with Porsche AG and Syngenta AG climbing more than 6 per cent. SAP AG, the largest maker of business-management software, and ASML Holding NV, Europe’s biggest chip-equipment maker, jumped after reporting better-than-estimated earnings.
The Stoxx Europe 600 Index advanced 2.8 per cent to 238.51 this week. The gauge has still retreated 18 per cent since this year’s high on Feb. 17 on concern that Greece will default, pushing borrowing costs higher for other indebted euro-area countries. The gauge traded at 9 times its companies’ estimated earnings on Sept. 22, the cheapest since March 2009, according to data compiled by Bloomberg. The Stoxx 600 last increased for three consecutive weeks more than six months ago.
Group of 20 finance ministers meet in Paris today and tomorrow to discuss a rescue plan for Europe’s struggling economies. German Chancellor Angela Merkel and French President Nicolas Sarkozy set an end-of-October deadline to devise a plan to recapitalize banks and get Greece on the right track, Sarkozy said Oct. 9.
“They are not going to avoid a Greek default at any cost, but they prefer to capitalize banks,” said Giuseppe Distefano, who helps oversee 100 million euros ($US139 million) as chief investment officer of Alessia Sicav in Luxembourg. “That helps remove the uncertainty originating in the Greek situation. That has been the main driver of the market rally.”
Spain credit downgrade
Standard & Poor’s yesterday cut Spain’s credit rating for the third time in three years. New data showed the eight largest US money-market funds almost halved their lending to French banks last month.
“With equity markets looking to post their best weekly gains in some time this improved sentiment is tempered somewhat by the propensity for European leaders to disappoint, when it comes to the crunch,” said Michael Hewson, a market analyst at CMC Markets in London.
Olli Rehn, the European Commissioner for Economic and Monetary Affairs, said in a speech in Dublin on Oct. 12 that the euro area is approaching a consensus on resolving its debt crisis and has a fairly good chance of averting calamity.
US retail sales
In the US, retail sales rose in September more than forecast, the Commerce Department said on Oct. 14, easing concern that slumping confidence and scant hiring will derail the biggest part of the world’s largest economy.
Porsche rose 6.7 per cent. The maker of the Cayenne sport- utility vehicle plans to sell a record 140,000 cars next year on demand for the next generation of the 911 and Boxster models, a person with knowledge of the matter said. Bayerische Motoren Werke AG, maker of the 3-Series sedan, advanced 11 per cent.
Syngenta climbed 7.3 per cent. The Basel, Switzerland-based chemicals maker forecast full-year revenue will rise “substantially” as the world’s largest maker of agricultural chemicals sees no drop-off in orders. Clariant AG, the world’s largest maker of printing-ink chemicals, surged 11 per cent, while Yara International ASA, the biggest publicly traded nitrogen-fertilizer maker, advanced 14 per cent.
SAP advanced 5.2 per cent. The largest maker of business- management software reported on Oct. 14 that third-quarter operating profit, based on non-international financial reporting standards, rose 23 per cent to 1.13 billion euros. The average analyst estimate in a Bloomberg survey called for earnings of 1.01 billion euros.
ASML shares gain
ASML soared 7.2 per cent. The company said on Oct. 12 that fourth-quarter orders will increase from the previous three months as customers add capacity and shift to more advanced machines.
Net bookings excluding second-generation EUV, or extreme ultraviolet, lithography systems reached 514 million euros in the third quarter, beating ASML’s earlier forecast of not more than 500 million euros. Net income rose 32 per cent from a year earlier to 355 million euros, beating the 323 million-euro average estimate of 16 analysts surveyed by Bloomberg.
Burberry Group Plc jumped 4.4 per cent. The U.K.’s largest luxury-goods maker reported fiscal second-quarter sales on Oct. 12 that beat analysts’ estimates, dispelling concern that demand was slowing with plans to add 15 per cent to its average retail space.
Bloomberg
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