Tags: Europe | inflation | stocks | ECB

European Stocks Climb Amid ECB Stimulus Bets as Inflation Slows

Tuesday, 30 September 2014 12:27 PM

European stocks rose, posting the longest quarterly winning streak since 2006, as investors speculated that the European Central Bank will boost stimulus after a report showed euro-area inflation slowed this month.

Royal Bank of Scotland Group Plc climbed 2.1 percent after saying total impairment charges for this year will be lower than previously forecast. Bank of Ireland Plc added 1.6 percent as RBS said rising Irish property prices helped reduce impairment charges in the country. Next Plc slipped 3.6 percent after saying it may cut its annual-profit forecast if warm weather in the U.K. continues throughout October.

The Stoxx 600 Europe Index climbed 0.8 percent to 343.67 at 4:30 p.m. in London, extending earlier gains after the regional inflation report. The equity gauge, which has advanced for five straight quarters, fell to a five-week low yesterday as banks slid and data showed economic confidence in the region dropped to the lowest since November.

“The ECB has done a lot already to stimulate economic activity in Europe,” Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit, said by phone from Hellerup, Denmark. “This week we’ll look for more details regarding the asset-backed securities program and covered bond program. We’re still waiting for the big bazooka, which would be the ECB really expanding their balance sheet.”

ECB Policy

The ECB, which meets to discuss monetary policy this week, has cut interest rates twice since June, announced targeted long-term loans for banks, and said it will start buying assets to avert a downward spiral in prices.

Consumer prices in the euro region rose an annual 0.3 percent this month, the European Union’s statistics office in Luxembourg said today. That’s in line with the median estimate in a Bloomberg News survey and follows a reading of 0.4 percent in August. Unemployment held at 11.5 percent in August, Eurostat said in a separate report.

National benchmark indexes rose in 15 of 18 western-European markets today. Germany’s DAX Index added 0.7 percent, France’s CAC Index climbed 1.6 percent, while the U.K.’s FTSE 100 Index dropped 0.2 percent.

RBS gained 2.1 percent to 368.8 pence. The lender will “significantly outperform” its previous guidance of about 1 billion pounds ($1.6 billion) worth of total impairments for 2014, according to a statement. The bank said it had lower levels of non-performing loans and didn’t see large one-off charges in the third quarter.

RBS said rising Irish residential property prices, as well as active debt management, led to lower liabilities at its personal and business banking unit in Ulster. Bank of Ireland added 1.6 percent to 31.2 euro cents.

Stora Enso

Stora Enso Oyj added 2.7 percent to 6.61 euros after selling its Corenso renewable-packaging unit to Powerflute Oyj for an enterprise value of about 90 million euros ($113 million).

Analyst upgrades also boosted companies. Lagardere SCA climbed 2.5 percent to 21.26 euros as Oddo & Cie recommended buying shares of the media company. Yara International ASA added 1.2 percent to 322.60 kroner after Liberum Capital raised its rating on the fertilizer supplier to buy from neutral. Associated British Foods Plc rose 4.5 percent to 2,679 pence as Credit Suisse Group AG advised clients to buy the stock.

Next dropped 3.6 percent to 6,615 pence after the clothing retailer said another month of warm weather will reduce full-year profit as shoppers delay updating their autumn wardrobes. The company on Sept. 11 reiterated a forecast for profit of as much as 815 million pounds.

Marks & Spencer Group Plc, the largest British clothing retailer, slipped 2.6 percent to 404.7 pence, its lowest price since April 2013.

A gauge of carmakers posted the worst performance of the 19 industry groups on the Stoxx 600, as Ford Motor Co. said it will miss a profit forecast for 2014. Renault SA fell 2.5 percent to 57.43 euros, while PSA Peugeot Citroen declined 1 percent to 10.17 euros.

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European stocks rose, posting the longest quarterly winning streak since 2006, as investors speculated that the European Central Bank will boost stimulus after a report showed euro-area inflation slowed this month.
Europe, inflation, stocks, ECB
Tuesday, 30 September 2014 12:27 PM
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