Tags: Europe | stocks | ECB | bonds

European Stocks Rise as Earnings Beat, ECB Said to Buy Bonds

Tuesday, 21 October 2014 01:25 PM

European stocks advanced after companies including Actelion Ltd. and Swedbank AB posted better-than-estimated earnings, while the European Central Bank was said to have bought Italian covered bonds.

Actelion added 3 percent after increasing its full-year prediction for a second time. Swedbank rose 4.7 percent after announcing job cuts and posting net income that beat estimates. Reckitt Benckiser Group Plc lost 2.1 percent after saying full-year sales growth will be at the lower end of its forecast.

The Stoxx Europe 600 Index climbed 2.1 percent to 323.74 at the close of trading. The equity gauge slid to its lowest level of 2014 on Oct. 16, after its longest losing streak in 11 years, on concern a financial crisis was returning to the region’s peripheral countries. Since then, the index has rebounded 4.4 percent amid optimism the ECB will enact sufficient stimulus measures to rekindle growth.

“The focus may go back to the micro, the corporate, as we get into the meat of the reporting season,” James Buckley, who helps oversee about $48 billion as a portfolio manager at Baring Asset Management Ltd. in London, said. “The quarter reported may be tough because of the global and geopolitical uncertainty, but guidance will be crucial and that’ll have some tailwinds in terms of lower commodity prices and weaker euro.”

The euro has weakened against 14 out of 16 peers this year, amid signs of fragility in Europe’s economy. Crude tumbled into a bear market this month on concern over a global supply glut.

Some 10 Stoxx 600 companies were scheduled to post results today. GlaxoSmithKline Plc, Credit Suisse Group AG, Daimler AG and Tesco Plc are among others that will report later this week.

Italian Bonds

The ECB bought Italian covered bonds as it returned to the market for a second day under its asset purchase program, according to two people familiar with the matter. The central bank bought short-dated French notes from Societe Generale SA and BNP Paribas SA as well as Spanish securities from other lenders yesterday.

“The ECB was slow to start and it’s still not U.S.-style QE, but they’re doing the best to talk up the market,” Justin Haque, an equity sales trader at Hobart Capital Markets LLP in London, said, referring to quantitative easing. “People’s appetite to short is now sated, so why not run long with the ECB?”

National benchmark indexes advanced in 17 of the 18 western-European markets today. Germany’s DAX Index climbed 1.9 percent, France’s CAC 40 Index increased 2.3 percent, and the U.K.’s FTSE 100 Index rose 1.7 percent.

Actelion Advances

Actelion climbed 3 percent to 105.50 Swiss francs, paring earlier gains of as much as 8.2 percent. Core earnings will increase in a low-twenties percentage range at constant exchange rates, compared with a previous forecast for growth in the mid- teen percentage range, the drugmaker said. It also said third- quarter core earnings jumped 31 percent to 209 million francs ($222 million). That beat the average analyst estimate of 184.6 million francs.

Swedbank gained 4.7 percent to 185.60 kronor. Sweden’s largest mortgage lender said it will cut as many as 800 jobs to cut costs as it adjusts to a low-rate environment. It also reported third-quarter net income of 4.56 billion kronor ($636 million), topping the 4.23 billion kroner estimated by analysts. Net interest income of 5.83 billion kronor also beat projections.

Akzo Nobel NV rose 4.9 percent to 51.75 euros. Europe’s largest paintmaker said its drive to improve efficiency is yielding results as it kept a 2015 profitability goal even amid challenging European markets. The targets include a 9 percent return on sales and 14 percent return on invested capital.

Havas SA climbed 7.5 percent to 6.22 euros. The advertising agency will report the strongest third-quarter organic growth among its peers, Nomura Holdings Inc. wrote in a note.

Reckitt Benckiser lost 2.1 percent to 5,010 pence. The maker of Nurofen painkillers and Veet hair-removal creams said full-year sales growth will be at the low end of its 4 percent to 5 percent forecast as expansion lags behind in Asia and Latin America.

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European stocks advanced after companies including Actelion Ltd. and Swedbank AB posted better-than-estimated earnings, while the European Central Bank was said to have bought Italian covered bonds.
Europe, stocks, ECB, bonds
Tuesday, 21 October 2014 01:25 PM
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