Europe Stocks Climb as GDP Data Fuel Stimulus Speculation

August 14, 2014

Frankfurt (Aug 14)  European stocks advanced, reversing earlier losses, as data showing the euro area’s recovery stalled in the second quarter fueled speculation of more central bank stimulus. U.S. futures were little changed, while Asian shares rose.

ThyssenKrupp AG climbed 1.6 percent after posting quarterly earnings that beat projections. Royal Boskalis Westminster NV surged 8.3 percent after saying it will start a share buyback program. RWE AG declined 2.3 percent after saying first-half profit fell 62 percent. Novozymes (NZYMB) A/S slid 6.3 percent after the supplier of enzymes reported second-quarter net income that trailed analyst estimates.

The Stoxx Europe 600 Index gained 0.3 percent to 331.15 at 12:16 p.m. in London, after earlier dropping as much as 0.4 percent. The benchmark gauge has fallen 1.4 percent this month amid crises in Ukraine, Iraq and the Gaza Strip. Standard & Poor’s 500 Index futures added 0.1 percent today, while the MSCI Asia Pacific Index rose 0.4 percent, climbing for a fourth day.

“There’s a perception that the low-growth environment might push the European Central Bank into some form of further action,” Michael Hewson, a chief market analyst, at CMC Markets Plc in London, said by telephone. “Whether that perception is right is unclear, but the market believes further stimulus is on the way. That’s giving a positive bias to equity markets in Europe.”

ECB Rates

The ECB in June cut the deposit rate to minus 0.1 percent and lowered the main refinancing rate to a record 0.15 percent. Policy makers next meet on Sept. 4.

Euro-region gross domestic product in the three months through June was unchanged from the first quarter, when it increased 0.2 percent, Eurostat, the European Union’s statistics office in Luxembourg, said today. The median forecast in a Bloomberg News survey was for growth of 0.1 percent.

Germany’s economy contracted last quarter more than expected, France failed to grow, while Italy fell into its third recession since 2008.

U.K. Monetary Policy Committee member David Miles said today that the Bank of England could keep rates at record-low levels for “a bit longer yet.” His comment follows BOE Governor Mark Carney’s yesterday that the Britain’s expansion faces challenges.

“Geopolitical concerns will always be there, but it’s ultimately about what central banks will do,” Hewson said. “Over the last 24 hours, it’s become more likely that we’ll get more from the ECB and that the prospects of higher interest rates from the Federal Reserve and BOE have been pushed further out.”

In the U.S., data at 8:30 a.m. in Washington may show applications for jobless claims rose in the week ended Aug. 9 to 295,000 from 289,000 in the prior period, economists predicted.

ThyssenKrupp Gains

ThyssenKrupp added 1.6 percent to 21.31 euros. Germany’s largest steelmaker posted a profit at its previously loss-making Steel Americas unit. Adjusted Ebit from continuing operations almost tripled to 398 million euros ($532 million) in the three months through June. Analysts had predicted 363.6 million euros. Sales in its fiscal third quarter rose 8.3 percent to 10.7 billion euros.

Boskalis Westminster surged 8.3 percent to 41.58 euros for its biggest gain since June 2012. The world’s largest dredging company said it will buy back as many as 10 million shares in the next 2 1/2 years. Boskalis also said first-half earnings before interest, taxes, depreciation and amortization jumped to 466 million euros from 280 million euros a year ago.

United Internet

United Internet AG rallied 6.3 percent to 31.70 euros. First-half sales increased 12 percent from a year earlier to 1.43 billion euros. Ebitda climbed 36 percent to 237.6 million euros.

TUI AG rose 5.1 percent to 11.06 euros. Operating profit at the owner of Europe’s largest tour operator jumped 89 percent in the third quarter as it cut costs, raised prices and improved hotel booking levels.

Carillion Plc (CLLN) jumped 7.3 percent to 343.5 pence after saying it has met with Balfour Beatty Plc (BBY)’s major shareholders in an effort to resurrect a merger that Britain’s largest builder rejected this week. Balfour Beatty rose 1 percent to 238.8 pence, as it said that it still opposes the proposal.

RWE slid 2.3 percent to 28.65 euros. Recurrent net income, the measure used to calculate dividends, dropped to 749 million euros in the six months ended June 30 from 1.99 billion euros a year earlier. That missed the 790 million-euro average analyst estimate. Sales fell 9.6 percent to 25.1 billion euros.

Novozymes Falls

Novozymes dropped 6.3 percent to 260.50 kroner. The Danish company reported second-quarter net income of 591 million kroner ($106 million), trailing analysts’ projections of 608 million kroner. Sales during the period also fell short of estimates.

GN Store Nord A/S (GN) retreated 3.9 percent to 137.10 kroner. The Danish hearing-aid maker reported second-quarter net income of 190 million kroner, missing the 216 million kroner estimated by analysts.

William Demant Holding A/S slid 5.5 percent to 466.30 kroner. The hearing-aid maker reported first-half earnings before interest and taxes of 834 million kroner, falling short of the 920 million kroner forecast by analysts.

Source: Bloomberg

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