Most European stocks climbed as ongoing speculation that the Federal Reserve will act to bolster the economy outweighed disappointing earnings from Heineken NV. (HEIA) Asian shares and U.S. index futures fell.
Ageas, the majority owner of Belgium’s largest life insurer, surged the most since May 2010 after announcing a buyback. WPP Plc (WPP), the world’s largest advertising company, advanced 4.7 percent as profit beat analysts’ estimates. Heineken, the world’s third-biggest brewer by volume, tumbled the most since 2003.
The benchmark Stoxx Europe 600 Index rose 0.2 percent to 227.16 at 12:13 p.m. in London as three stocks gained for each that declined. The gauge has still fallen 22 percent from this year’s peak on Feb. 17 as European and U.S. economic data that trailed economists’ forecasts added to concern the global recovery is at risk.
The MSCI Asia Pacific Index tumbled 1.2 percent, while Standard & Poor’s 500 Index futures fell 0.8 percent after the benchmark U.S. gauge yesterday surged 3.4 percent.
“It remains to be seen whether the most recent bounce in U.S. markets will translate to a sustained rally in equities,” said Gregg Bridger, European fund manager at Four Capital Partners Ltd. in London. “We believe markets will continue to remain volatile in the near term. There are a number of headwinds to investor sentiment including concerns over global growth and the ongoing fiscal difficulties in the euro zone.”
Fed Meeting
Central bankers are meeting this weekend in Jackson Hole, Wyoming. At last year’s event, Fed Chairman Ben S. Bernanke’s hint of a second round of asset purchases, or quantitative easing, spurred a 28 percent jump in the S&P 500 through April.
“There still seems to be this thought that Europe and the U.S. are wrapped up in a relief rally, topped by the expectation that something good will be unveiled at the Fed’s Jackson Hole summit,” said Cameron Peacock, a market analyst at IG Markets in Melbourne. “There’s certainly plenty of scope on the downside even if Bernanke does deliver the goods.”
A U.S. report at 8:30 a.m. in Washington today may show orders for durable goods excluding transportation equipment fell in July on concern about a slowing economic recovery. The projected 0.5 percent drop in the less-volatile measure of orders would follow a 0.4 percent increase the prior month, according to the median forecast of 50 economists surveyed by Bloomberg News.
German Confidence
In Germany, business confidence fell to the lowest in more than a year as a global slowdown and Europe’s debt crisis damped the outlook for economic growth. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 108.7 in August from 112.9 in July.
European industrial orders fell in June by 0.7 percent after rising 3.6 percent in May, the European Union’s statistics office in Luxembourg said today. Economists had forecast a gain of 0.4 percent, according to a Bloomberg News survey showed.
German Chancellor Angela Merkel rejected demands that Greece provide collateral for emergency loans as splits emerged in her Cabinet. She said a call by Labor Minister Ursula von der Leyen for countries to put up gold as security for bailouts is “not the right way.”
The disagreement underscores risks over a second Greek aid package after the Finnish government said Aug. 16 that it secured a collateral arrangement to ensure its contribution would be repaid. Austria and the Netherlands, which both share Finland’s AAA rating, called for similar deals, as did Slovakia and Slovenia.
Ageas (AGS), WPP
Ageas surged 15 percent to 1.25 euros, the most since May 2010, after saying it will buy back as much as 250 million euros ($360 million) of shares. The company also reported a first-half net loss of 58.8 million euros, narrower than the 115 million- euro loss analysts had projected.
WPP jumped 4.7 percent to 607.50 pence as first-half profit beat analysts’ estimates after sales in emerging markets grew 11 percent from a year earlier. Profit, excluding some items such as the impact of interest and taxes, rose to 517.9 million pounds ($854 million) from 455.3 million pounds a year ago, beating the 512.6 million pounds analysts had forecast in a Bloomberg News survey.
Tullow Oil Plc (TLW), the London-based explorer with the most licenses in Africa, rallied 5.4 percent to 997.50 pence after saying that profit after tax more than tripled to $330 million as oil production from Ghana boosted revenue in the first six months of the year. The company also doubled its interim dividend to 4 pence a share.
Analyst Estimates
Of the 303 companies in the Stoxx 600 that have reported earnings since July 11, 142 missed analysts’ estimates for per- share profit, while 137 outperformed, according to data compiled by Bloomberg. The valuation of Stoxx 600 companies as a multiple of their estimated earnings has slipped to 9.4, near its lowest level since March 2009.
Man Group Plc (EMG), the world’s largest hedge fund manager, soared 5 percent to 205.80 pence after Nitin Arora, an analyst at HSBC Holdings Plc, raised the stock to “overweight” from “underweight.”
Holcim Ltd. (HOLN), the world’s second-largest cement maker, jumped 3.7 percent to 46.01 Swiss francs after Credit Suisse Group AG lifted the company’s shares to “outperform” from “neutral.”
A gauge of construction companies was among the best performers of the 19 industry groups in the Stoxx 600. Hochtief AG (HOT) rose 2.4 percent to 45.88 euros and Carillion Plc (CLLN), a U.K. support and construction services company, added 5 percent to 327 pence. Carillion was raised to “buy” from “add” by Howard Seymour, an analyst at Numis Securities Ltd.
Heineken Falls
Heineken dropped 13 percent to 31.58 euros, its biggest slump since June 2003, after reporting first-half earnings before interest and taxation, excluding one-time items, of 1.26 billion euros, missing the median analyst estimate of 1.37 billion euros.
The company said full-year profit is unlikely to grow, saying so-called organic net income for 2011 will be “broadly in line” with last year’s 1.45 billion euros. Analysts forecast adjusted profit of 1.68 billion euros.
Royal Unibrew A/S, Scandinavia’s second-largest brewer, sank 5.8 percent to 268.50 kroner after the company said it expects 2011 revenue and earnings to be in the lower end of its previously expected ranges due to “unusually bad weather” and consumer restraint, especially in Italy. Unibrew reported second-quarter net income of 115 million kroner ($22 million), topping the median estimate of 108 million kroner.
Anheuser-Busch InBev NV (ABI), the world’s biggest brewer, dropped 3.2 percent to 36.86 euros and Carlsberg A/S fell 2.5 percent to 343.90 kroner.
L’Oreal SA (OR), the world’s largest cosmetics maker, retreated 2.2 percent to 78.08 euros. Royal Bank of Scotland Group Plc analysts said “recent share price resilience looks at odds with the discretionary nature of L’Oreal’s portfolio.”
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