European stocks advanced, with the benchmark Stoxx Europe 600 Index rising for a third day, as investors speculated that European Union leaders will agree on a plan to extend a bailout for Greece.
National Bank of Greece SA (ETE) led a rally of banks across Europe as the leaders of euro-area governments were said to accept lower interest rates on loans to Greece, Portugal and Ireland. Commerzbank AG (CBK) soared 9.5 percent, its largest gain since Sept. 2009, while Barclays Plc (BARC) jumped 7.8 percent.
The Stoxx 600 climbed 1.1 percent to 270.64 at the 4:30 p.m. close in London, gaining for a third day. The benchmark measure has still retreated 7.1 percent from this year’s high on Feb. 17 amid growing concern that the region’s debt crisis will spread from Greece to Italy and Spain.
“This is an element of relief,” said Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg. “If there is an extension, that reassures the market. Sentiment was so negative recently that any news to avoid a collapse is good news. Now we have to see the details of the plan. We hope there will be a solution and the market can extend gains.”
National benchmark indexes in every western European market except Iceland and Sweden rose today. The U.K.’s FTSE 100 Index increased 0.9 percent. Germany’s DAX Index (DAX) climbed 1 percent, while France’s CAC 40 Index (CAC) rallied 1.7 percent.
Bailout Fund
Euro-area leaders may accept a temporary Greek default, officials said. The heads of government meeting in Brussels may cut the interest rates on loans to Greece, Portugal and Ireland to about 3.5 percent and double the repayment period to at least 15 years.
The EU’s main rescue fund, the European Financial Stability Facility, may get the power to buy bonds from investors, helping countries to recapitalize lenders and offering precautionary lines of credit to repel speculative attacks.
The Stoxx 600 Banks Index posted its biggest three-day gain in a year, led by National Bank of Greece which surged 11 percent to 4.90 euros. EFG Eurobank Ergasias SA (EUROB), Greece’s second-biggest lender, increased 6.8 percent to 2.82 euros. Alpha Bank SA soared 3.8 percent to 3.03 euros.
Commerzbank rallied 9.5 percent to 2.75 euros in Frankfurt, its biggest gain in 22 months. Barclays jumped 7.8 percent to 239.9 pence in London, its largest jump since May 2010. UniCredit SpA (UCG) rose 10 percent to 1.38 euros and Intesa Sanpaolo SA surged 9.5 percent to 1.80 euros, its largest rally in six months.
European services and manufacturing growth weakened more than economists had forecast to the slowest pace in almost two years, adding to signs that the euro-area’s recovery is losing momentum as its debt crisis persists.
Purchasing Managers
A composite index based on a survey of euro-area purchasing managers in both industries fell to 50.8 in July from 53.3 in June, London-based Markit Economics said today. That’s the lowest since August 2009. Economists had predicted a drop to 52.6, the median of 17 estimates in a Bloomberg News survey showed.
Swedbank AB (SWEDA) jumped 6.2 percent to 110.80 kronor. The bank said second-quarter net income rose to 3.45 billion kronor ($546 million) from 1.57 billion kronor a year earlier. That beat the average analyst estimate of 3.22 billion kronor in a Bloomberg survey.
AstraZeneca, Kingfisher
AstraZeneca Plc (AZN) rallied 2 percent to 3,092 pence after winning U.S. approval for its heart drug Brilinta, a potential $1 billion seller that will rival Plavix, the world’s second- best selling drug. The Food and Drug Administration cleared Brilinta, also known as ticagrelor, for use by patients with severe chest pain or heart-attack history to cut the risk of heart attacks, strokes and death, the agency said yesterday.
Kingfisher Plc (KGF) advanced 5.6 percent to 267.4 pence. Europe’s largest home-improvement retailer rose as growth in sales at its French business helped offset a decline in revenue at its U.K. stores.
Nokia Oyj (NOK1V) increased 2.5 percent to 4.18 euros even as the Finnish mobile-phone maker that’s ceding market share to Google Inc. and Apple Inc. reported its first quarterly loss in 1 1/2 years. Handset sales slumped after Nokia agreed to install Microsoft Corp.’s operating system on its smartphones.
Ericsson AB slumped 9.7 percent to 83 kronor for its largest retreat in 2 1/2 years. The company said second-quarter net income rose to 3.12 billion kronor from 1.88 billion kronor a year earlier. That fell short of the average estimate for profit of 3.88 billion kronor, according to a survey of analysts compiled by Bloomberg.
Konecranes Oyj (KCR1V) sank 8.3 percent to 22.92 euros for its largest drop since November 2008. The company reported second- quarter net income of 15.5 million euros ($22 million), missing the 23.7 million-euro mean estimate of 11 analysts surveyed by Bloomberg.
Scania AB (SCVB) retreated 4.5 percent to 127.30 kronor. The Swedish truckmaker controlled by Volkswagen AG reported quarterly profit that missed analysts’ estimates as orders from Brazil slowed.
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