Wednesday, September 14, 2011

European Stocks Advance for a Second Day on China; U.S. Index Futures Gain

European stocks rose for a second day amid speculation China may still support the region even after Premier Wen Jiabao said indebted countries must not rely on bailouts.

BP Plc (BP/) climbed 4.5 percent after a report that an investigation into last year’s Gulf of Mexico oil spill will spread blame between the company and contractors. Next Plc (NXT) rallied 6.2 percent after reporting increased earnings. Swedbank AB (SWEDA) slid 4.3 percent after halting share buybacks due to the “intensified financial anxiety in Europe.”

The benchmark Stoxx Europe 600 Index advanced 1.5 percent to 224.13 at 2:10 p.m. in London. The gauge erased an earlier loss of as much as 1 percent after Caijing magazine reported that China is still willing to buy bonds of nations hit by the debt crisis, citing Zhang Xiaoqiang, a vice chairman of the National Development and Reform Commission.

The comments from Zhang “may have eased worries about the European debt crisis,” said Alexander Kraemer, a cross-asset strategist at Commerzbank AG in Frankfurt. “We may also see short covering ahead of the triple witching on Friday” when futures and options on European equity indexes are expire.

Debt Crisis
The Stoxx 600 has plunged 23 percent from this year’s peak in February as the debt crisis spreads from Greece to the larger economies of Italy, Spain and France. Greek Prime Minister George Papandreou is due to hold a conference call with German Chancellor Angela Merkel and French President Nicolas Sarkozy today amid increasing speculation that Greece will default. Spain is scheduled to sell debt tomorrow, after demand fell at an auction by Italy yesterday.

Wen, speaking at the World Economic Forum in Dalian, China, signaled that developed nations should cut deficits and create jobs rather than relying on China to bail out the world economy. Stocks gained in the U.S. on Sept. 12 after the Financial Times reported that Italy aims to sell “significant” quantities of bonds and stakes in strategic companies to China.

“Countries must first put their own houses in order,” Wen said. “Developed countries must take responsible fiscal and monetary policies. What is most important now is to prevent the further spread of the sovereign debt crisis in Europe.”

BRIC Support
Finance ministers from Brazil, Russia, India and China will meet on Sept. 22 to discuss ways to help Europe overcome its debt crisis, R. Gopalan, secretary in the Department of Economic Affairs in the finance ministry, said in New Delhi.

A Commerce Department report showed U.S. retail sales unexpectedly stagnated in August, falling short of an average forecast for a 0.2 percent increase in a Bloomberg survey of 83 economists.

BP, the operator of the Deepwater Horizon oil rig that caused the worst spill in U.S. history last year, climbed 4.5 percent to 398.80 pence.

The investigation by the U.S. Coast Guard and the offshore oil regulator will say some of BP’s partners are also to blame in a report that may be published today, the Wall Street Journal said. That would weaken the case that BP was grossly negligent in the accident and lower the level of fines it would pay for the almost 5 million barrels of crude that spewed into the Gulf over three months. Transocean Ltd. (RIG), which owned the Deepwater Horizon, rose 2 percent to 50.00 Swiss francs.

Next Climbs
Next rallied 6.2 percent to 2,479 pence, the highest price since the share was listed in 1988, as the U.K.’s second-largest clothing retailer reported a jump in first-half earnings and said next year may not be as challenging for the industry. Debenhams Plc (DEB), the U.K.’s biggest department-store retailer, rose 8.4 percent to 56.85 pence.

Finmeccanica SpA (FNC) soared 15 percent to 5.18 euros, the biggest gain in more than a decade. Italy’s biggest arms company may be close to an agreement to sell its AnsaldoBreda train- making unit to General Electric Co., il Tirreno reported, citing a city of Pistoia politician, Alessio Bartolomei.

Ansaldo STS SpA (STS) jumped 24 percent to 6.80 euros as the newspaper said GE may also be interested in Finmeccanica’s railway technology unit, citing no one.

Sonova Holding AG (SOON), Europe’s biggest hearing aid-maker, surged 11 percent to 73.90 francs after receiving approval from the U.S. Food and Drug Administration to resume sales of the HiRes 90K cochlear implant following a recall.

Swedbank, the third largest Swedish lender and the biggest bank in the Baltic countries, declined 4.1 percent to 74.25 kronor after halting buybacks.

“We see today no altered risk in our portfolio but the perception of our buyback program is not supporting Swedbank’s brand in the current market situation,” Chief Executive Officer Michael Wolf said in a statement today. “On my recommendation the board have decided to halt further repurchases until the market situation becomes clearer.”

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