Tuesday, September 27, 2011

European Stocks Rally for Third Day Amid Debt-Crisis Efforts

European stocks climbed the most this month amid speculation policy makers will increase efforts to contain the region’s sovereign-debt crisis. Asian shares and U.S. index futures advanced.

BNP Paribas (BNP) SA and Societe Generale SA led a rally in banks, soaring more than 8 percent. MAN SE (MAN) rose 7 percent as European Union regulators cleared Volkswagen AG (VOW)’s takeover of the truckmaker. Novartis AG (NOVN), Europe’s second-biggest drugmaker by sales, rose 1.8 percent after its Seebri treatment showed positive results in two studies.

The benchmark Stoxx Europe 600 Index climbed 3.2 percent to 227.27 at 1:17 p.m. in London, the biggest increase since Aug. 31. The gauge has surged 5.8 percent over the past three trading days after falling to a two-year low on Sept. 22. That’s the biggest three-day gain in six weeks.

“The markets are hoping that the international leaders and politicians will act together and do what is needed to avoid a disaster,” said Lars Knudsen, who manages about $110 million at LGT Capital Management AG in Pfaeffikon, Switzerland. “Politicians are starting to feel pressure to act on the crisis. It is important that the European leaders act now.”

The Stoxx 600 fell 26 percent from this year’s peak in February through Sept. 22 as European and U.S. economic reports trailed forecasts, adding to concern that the global recovery is at risk. The decline left the measure trading at 9 times estimated earnings, the cheapest since March 2009, data compiled by Bloomberg show.

Asian, U.S. Shares

The MSCI Asia Pacific Index rallied 4.2 percent today, while Standard & Poor’s 500 Index futures increased 1.7 percent.

U.S. Treasury Secretary Timothy F. Geithner predicted that European governments will step up their response to their region’s debt crisis after a chiding from counterparts around the world.

“They heard from everybody around the world” in Washington meetings last week, Geithner said on ABC’s “World News With Diane Sawyer” program. Europe’s crisis is “starting to hurt growth everywhere, in countries as far away as China, Brazil and India, Korea. And they heard the same message from us they heard from everybody else, which is it’s time to move.”

Policy makers in Europe now understand the severity of the debt crisis and the actions that need to be taken, according to Pacific Investment Management Co.’s Mohamed A. El-Erian.

‘Deep Problems’
“What I learned in Washington is that Europeans finally get it,” El-Erian, chief executive and co-chief investment officer at the world’s biggest manager of bond funds, said in a radio interview today on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “They recognize they have deep problems and they recognize they need to do something about it.”

Financial markets are looking for stronger leadership from policy makers to help Greece overcome the current debt crisis, Greek Prime Minister George Papandreou said in a speech to a German industry federation event in Berlin.Papandreou tests the strength of his parliamentary majority today as lawmakers vote on a property tax that is key to persuading the EU and International Monetary Fund to release an aid installment and avert default.

Greek Finance Minister Evangelos Venizelos said he expects euro-area authorities to approve an aid payment this month and that it will be received “in time.” He spoke to reporters in Athens today.

‘Increasingly Confident’
Traders are “suddenly becoming increasingly confident that European leaders can now reach an agreement to successfully contain the debt crisis,” said Chris Weston, an institutional trader at IG Markets in Melbourne. “Investors must hold their nerve and at the same time central banks and finance ministers need to remain ‘on message’ as any suggestions that the rescue plans may go away will likely be enough to see markets take fright once again.”

In the U.S., a report at 9 a.m. New York time may show home prices declined in July from a year earlier. The S&P/Case- Shiller index of property values in 20 cities fell 4.4 percent from July 2010, the 10th consecutive year-to-year drop, according to the median forecast of 27 economists surveyed by Bloomberg News. Another report may show consumer confidence held in September near a two-year low.

BNP Paribas and Societe Generale (GLE), France’s largest banks, pushed a gauge of European lenders higher, soaring 10 percent to 28.98 euros and 8.5 percent to 19.04 euros, respectively. Credit Agricole SA (ACA) jumped 7.9 percent to 4.95 euros.

Austria’s Erste Group Bank AG (EBS) surged 9.6 percent to 20.77 euros while Deutsche Bank AG (DBK), Germany’s biggest lender, increased 10 percent to 27.69 euros.

Insurers Gain
Allianz SE (ALV) and Axa SA (CS), Europe’s biggest insurers, climbed 9 percent to 70.85 euros and 8.9 percent to 9.78 euros, respectively. Delta Lloyd NV (DL) climbed 10 percent to 11.25 euros. A gauge of insurance companies in the Stoxx 600 is heading for the biggest two-day gain since March 2009.

MAN rose 7 percent to 63.15 euros, the biggest gain since Aug. 11. Volkswagen’s takeover obtained antitrust approval without the need for asset sales or other remedies, the European Commission said late yesterday. The Wolfsburg, Germany-based carmaker will own 55.9 percent of MAN’s voting rights after the deal closes. Volkswagen preferred shares gained 4.5 percent to 106.15 euros.

Novartis added 1.8 percent to 49.99 Swiss francs after the company’s Seebri drug improved lung function in patients with smoker’s cough and helped them exercise for longer, according to two studies that the Swiss drugmaker is using to apply for regulatory approval.

Mining Companies Rise
Rio Tinto Group, the world’s second-largest mining company, rose 5.4 percent to 3,125 pence as copper gained for the first day in eight in London trading.

Antofagasta Plc (ANTO), the copper producer controlled by Chile’s Luksic family, climbed 8.8 percent to 1,034 pence and Kenmare Resources Plc (KMR) jumped 5.5 percent to 45.80 euro cents. Vedanta Resources Plc (VED) rallied 10 percent to 1,179 pence, the biggest gain since May 2010.

Logica Plc (LOG), the Anglo-Dutch computer services provider, gained 6.5 percent to 79 pence as Les Echos reported that Thales SA, Europe’s largest defense-electronics producer, plans to sell its Business Solutions unit, citing unidentified people. The newspaper named Logica as one of the possible buyers.

Alstom SA (ALO), the third-largest maker of power equipment, increased 7.5 percent to 25.67 euros as Morgan Stanley analyst Ben Uglow, who has an “overweight” rating for the shares, said the stock is “very attractive.”

Vestas Wind Systems A/S, the world’s biggest wind-turbine maker, gained 8.2 percent to 92.85 kroner. The company’s shares were raised to “market perform” from “underperform” at Sanford C. Bernstein & Co.

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