European stocks rose for a second day amid continuing speculation the Federal Reserve will take action to bolster the economy and as Chinese manufacturing data exceeded forecasts. U.S. index futures and Asian shares gained.
UBS AG (UBSN), Switzerland’s biggest bank, advanced 2.5 percent after saying it plans to cut 3,500 jobs to trim costs. Charter International Plc (CHTR) soared 23 percent after the welding and automation-equipment maker said it’s in takeover talks with a potential bidder other than Melrose Plc.
The benchmark Stoxx Europe 600 Index added 1.2 percent to 227.56 at 12:08 p.m. in London, after earlier surging as much as 2.2 percent. The gauge has still fallen 22 percent from this year’s peak on Feb. 17 as European and U.S. economic data that trailed forecasts added to concern the global recovery is at risk. The retreat has left the Stoxx 600 trading at about 9.5 times its companies’ estimated earnings, near the lowest since March 2009, Bloomberg data show.
“Chinese PMI is today’s good news as it shows the world is not falling apart as everybody seemed to believe,” said Morten Kongshaug, a chief equity analysts at Danske Bank A/S in Copenhagen. “European PMI is also a positive as the economy is not contracting.”
Chinese Manufacturing
Chinese manufacturing may contract at a slower pace in August as the world’s second-biggest economy weathers slumping global confidence, according to a preliminary purchasing- managers index compiled by HSBC Holdings Plc and Markit Economics. The reading of 49.8 for August compared with 49.3 last month. A result below 50 indicates a contraction.
A composite index based on a survey of euro-area purchasing managers in both services and manufacturing remained at 51.1, Markit said. Economists had forecast a drop to 50, the median of 15 estimates in a Bloomberg News survey showed.
The MSCI Asia Pacific Index surged 2.1 percent today. Standard & Poor’s 500 Index futures rose 1.4 percent after the benchmark gauge for U.S. equities added less than 0.1 percent yesterday.
The Fed is holding its annual symposium in Jackson Hole, Wyoming, this weekend. This time last year Chairman Ben S. Bernanke hinted that the central bank might embark on a second round of asset purchases, kicking off a 28 percent rally in the S&P 500 that ended in a three-year high on April 29.
Fed Stimulus
“Much of the gains being seen here seem to be coming off the expectation that the Fed will serve up further stimulus measures, possibly as soon as the end of this week,” said Cameron Peacock, a market analyst at IG Markets in Melbourne. “Clearly with this being priced in, failure to deliver here will see traders heading for the exits once again.”
Stocks pared their advance as a gauge of German investor confidence fell more than economists forecast to the lowest in more than 2 1/2 years in August on concern Europe’s debt crises will curb growth.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, dropped to minus 37.6 from minus 15.1 in July. That’s the lowest since December 2008. Economists expected a decline to minus 26, according to the median of 36 estimates in a Bloomberg survey.
A group of solar energy stocks rose after Goldman Sachs recommended buying ‘stocks with sector leading returns and strong industrial positioning’ such as Wacker Chemie AG, which rose 4.7 percent to 96.66 euros in Frankfurt, and Meyer Burger Technology AG that climbed 5.2 percent to 28.45 francs in Zurich.
U.S. Economy
In the U.S., purchases of new homes probably fell for a third straight month in July, economists said before a report today. Sales fell 0.6 percent to a 310,000 annual pace, the slowest in four months, from a 312,000 rate in June, according to the median estimate of 75 economists in a Bloomberg survey.
UBS gained 2.5 percent to 10.79 Swiss francs after saying it will eliminate about 3,500 jobs, or 5.3 percent of the workforce, as stricter capital requirements and a slowdown in client trading reduce earnings. Credit Suisse Group AG (CSGN), the second-largest Swiss bank, rose 2.7 percent to 21.20 francs.
Charter rallied 23 percent to 762 pence, the biggest gain since June. The company has turned down two indicative cash-and- share offers from Melrose this year.
ARM Holdings Plc (ARM), the designer of chips for Apple Inc.’s iPhone, jumped 5.2 percent to 517.5 pence. The Guardian, the London-based Times and the Daily Mail all reported that the company may be a takeover target after Hewlett-Packard Co.’s acquisition of Autonomy Corp. last week.
G4S Gains
G4S Plc (GFS), the world’s largest publicly traded provider of security services, gained 7.1 percent to 260.9 pence. The company said first-half net income rose to 108 million pounds ($179 million) from 94 million pounds and said it’s optimistic about business in the second half and into 2012.
NKT A/S slumped 15 percent to 188.8 kroner after the world’s biggest maker of industrial vacuum cleaners cut its full-year outlook and reported second-quarter net income that fell short of analyst estimates.
Of the 300 companies in the Stoxx 600 that have reported earnings since July 11, 141 missed analysts’ estimates while 135 outperformed. Earnings were less than 1 percent higher than in the previous quarter.
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