Tags: Europe | stocks | Telecom Italia | Ukraine

European Stocks 'Stalling' as Telecom Italia, Asos Rally

Wednesday, 27 August 2014 11:59 AM

European stocks were little changed, following their biggest two-day advance since April, as signs of progress in talks between Russia and Ukraine offset worse-than-projected German confidence data.

Telecom Italia gained 3.2 percent after Brazil’s Oi SA said it may buy an $8 billion stake in Tim Participacoes, a group company of Telecom Italia. Portugal Telecom, which is merging with Oi, jumped 6.7 percent. Asos rallied the most in a decade amid takeover speculation. Marine Harvest dropped 2.7 percent after posting an unexpected quarterly loss. United Utilities Group fell 1.2 percent after analysts downgraded the U.K.’s largest publicly traded water company.

The Stoxx Europe 600 Index added less than 0.1 percent to 343.24 at 4:30 p.m. in London. The gauge climbed 1.8 percent in the past two days after European Central Bank President Mario Draghi signaled policy makers are ready to add stimulus.

“It seems like markets are stalling a bit,” Espen Furnes, who helps oversee about $85 billion at Storebrand Asset Management in Oslo, said. “The earnings season is ending now and we’re entering into a period with little company news. So we don’t foresee any big moves going forward, bar any big geopolitical happenings. The situation in Ukraine is still tense, but at least they’re now talking to each other.”

Ukraine Crisis

Russian President Vladimir Putin said he held positive talks with Ukrainian counterpart Petro Poroshenko over tensions between the two countries. More than 2,000 people have died amid fighting between pro-Russian separatists and Ukrainian forces. Poroshenko said that Russia, Belarus and Kazakhstan are backing a Ukrainian peace strategy.

In Germany, a consumer confidence index will fall to 8.6 in September from a revised 8.9 in August, GfK AG forecast in a report. Economists in a Bloomberg survey had called for a reading of 8.9.

Telecom Italia climbed 3.2 percent to 86.25 euro cents. Oi said it asked Banco BTG Pactual to review options enabling it to buy a stake in Tim, Brazil’s second-largest mobile carrier. A group company of Telecom Italia owns 67 percent of Tim, which has a market value of more than $12 billion.

Portugal Telecom rallied 6.7 percent to 1.56 euros, posting its biggest three-day increase in more than four years. The PSI 20 Index advanced 1.4 percent in Lisbon. The measure has climbed 11 percent since Aug. 12, after tumbling 12 percent in July.

National benchmark indexes advanced in 13 of the 18 western European markets. The U.K.’s FTSE 100 and France’s CAC 40 each added less than 0.1 percent, while Germany’s DAX fell 0.2 percent.

Business Class

Ryanair Holdings gained 3.7 percent to 7.19 euros after Europe’s biggest discount carrier began selling flexible tickets targeting business passengers. The Business Plus fare, including priority boarding and free same-day ticket changes, may account for as much as 30 percent of sales over time, Chief Marketing Officer Kenny Jacobs said. Ryanair also said it will submit a non-binding offer for Cyprus Airways.

A gauge of travel and leisure stocks posted the second-best performance among the industry groups on the Stoxx 600. Deutsche Lufthansa advanced 2.4 percent to 13.74 euros.

Polymetal International gained 3.4 percent to 540.5 pence after posting first-half earnings before interest, taxes, depreciation and amortization of $310 million. That exceeded the average analyst prediction of $259.3 million.

Takeover Talk

Asos surged 19 percent to 2,791 pence, for its biggest rally since March 2004. Guardian newspaper reported speculation that the online-only fashion retailer may be a takeover target for companies such as EBay, at a price of as much as 50 pounds per share. A spokesman for Asos said the company does not comment on market speculation, while an EBay official wasn’t immediately available for comment.

Marine Harvest declined 2.7 percent to 83.50 kroner after reporting a second-quarter net loss of 144 million kroner ($23.3 million), compared with analysts’ average estimate that called for an income of 1.04 billion kroner. The world’s biggest salmon farmer said asset-value reduction as well as a 20 million-euro ($26.4 million) fine imposed by the European Commission related to its acquisition of Morpol, hurt earnings. Sales of 6.6 billion kroner matched projections.

United Utilities lost 1.2 percent to 897 pence after RBC Capital Markets lowered its recommendation to sector perform, similar to neutral, citing a lack of positive factors in the near term. Separately, Bank of America’s Merrill Lynch unit downgraded the stock to underperform, or sell.

Seadrill declined 2.5 percent to 225.80 kroner after saying it will refrain from ordering new rigs because of market uncertainty. The world’s biggest drilling-rig company reported second-quarter profit of $605 million, compared with $1.73 billion a year earlier.

Foxtons Group slid 10 percent to 264.2 pence, the biggest drop since its listing last September. Chief Executive Officer Nic Budden said London’s property market may be facing a slowdown in the second half of the year. The property broker focused on London and southeast England said first-half revenue rose 16 percent.

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European stocks were little changed, following their biggest two-day advance since April, as signs of progress in talks between Russia and Ukraine offset worse-than-projected German confidence data.
Europe, stocks, Telecom Italia, Ukraine
Wednesday, 27 August 2014 11:59 AM
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