Thursday, September 29, 2011

European Stocks Advance After Data on U.S. Jobs, Growth Exceed Forecasts

European stocks rose, erasing earlier losses, as U.S. reports showed claims for unemployment benefits fell more than forecast last week and the economy grew faster than estimated in the second quarter.

BNP Paribas (BNP) SA and UBS AG (UBSN) led gains in banking shares, adding more than 5 percent, as German lawmakers approved an expansion of the euro-area bailout fund. Hennes & Mauritz AB (HMB) surged 6.1 percent after Europe’s second-largest clothing retailer reported earnings that beat analyst estimates.

The Stoxx Europe 600 Index climbed 1.3 percent to 230.39 at 2:58 p.m. in London, having earlier dropped as much as 0.7 percent. The measure is heading for its worst quarter since 2008, having fallen 16 percent amid concern global economic growth is slowing and policy makers are struggling to contain the European debt crisis. The gauge has dropped 3 percent this month following a 10 percent slump in August.

“U.S. data is providing a positive surprise to support a bounce in stocks,” said Daniel Weston, a portfolio adviser at Schroeder Equities GmbH in Munich. “Europe is showing glimmers of hope for political certainty.”

A report today showed a revised 1.3 percent increase in U.S. gross domestic product in the second quarter, compared with a 1 percent gain previously calculated. The median forecast of economists surveyed by Bloomberg News was for 1.2 percent growth, following a 0.4 percent increase in the first three months of the year.

Jobless Benefits
Applications for jobless benefits dropped by 37,000 in the week ended Sept. 24 to 391,000, the fewest since April, Labor Department figures showed. Economists had forecast 420,000 claims, according to the median estimate in a Bloomberg survey.

Germany’s lower house of parliament approved the expansion of the European bailout fund, the European Financial Stability Facility, today in Berlin. Lawmakers in the Bundestag voted 523 in favor of the legislation, while 85 voted against; three abstained. The legislation is set to be debated and set to a non-binding vote in the upper house, or Bundesrat, tomorrow.

“Policy makers will eventually be able to engineer an ‘orderly’ Greek default and the euro will survive,” Michala Marcussen, the Paris-based global head of economics at Societe Generale SA, wrote in a report today. “The economic costs of the alternatives are simply too high. This will require further steps down the road to fiscal federalism.”

Benchmark Indexes
National benchmark indexes climbed in every western European market, except Greece and Iceland. Germany’s DAX surged 1.7 percent, France’s CAC 40 advanced 1.8 percent and the U.K.’s FTSE 100 rose 0.4 percent.

BNP Paribas, France’s biggest bank, rallied 7.6 percent to 31.90 euros and UBS, Switzerland’s largest bank, advanced 5.1 percent to 11.57 francs. Banking shares were the best performers in the Stoxx 600 today, climbing 3.5 percent.

H&M advanced 6.1 percent to 207.80 kronor. Operating profit fell 17 percent to 4.71 billion kronor ($700 million) in the three months ended Aug. 31, Stockholm-based H&M said today. The average of 17 analyst estimates compiled by Bloomberg was 4.35 billion kronor. The gross margin narrowed to 58.6 percent from 60.5 percent a year earlier, beating the 57.8 percent average estimate.

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