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Monday, 19 November 2012
European Stocks Advance Amid U.S. Budget Talks Optimism
By Sarah Jones - Nov 19, 2012 2:48 PM GMT+0400
European (SXXP) stocks climbed, rebounding from a three-month low, as U.S. PresidentBarack Obama expressed confidence that he will strike a deal with Congress on a new budget. U.S. index futures and Asian shares also rose.
HSBC Holdings Plc (HSBA) added 1.8 percent after Europe’s largest lender by market value said it has held talks to sell its stake in Ping An Insurance (Group) Co. BP Plc (BP/) gained 2.8 percent following a report that the oil company plans a 3.7 billion- pound ($5.9 billion) buyback.ING Groep NV (INGA) advanced 2.2 percent after the European Commission granted it more time to sell its insurance operations in the region.
following a report that the oil company is planning a 3.7 billion-pound buyback. Photographer: Jock Fistick/Bloomberg
US President Barack Obama waves to media after his arrival at Don Mueang International airport in Bangkok on November 18, 2012. Photographer: Pornchai Kittiwongsakul/AFP/Getty Images
The Stoxx Europe 600 Index rose 1 percent to 265.55 at 10:47 a.m. in London, its biggest climb in more than two weeks, as the Republican U.S. House Speaker John Boehner said he has held constructive budget talks with Obama. Standard & Poor’s 500 Index futures increased 0.4 percent and the MSCI Asia Pacific Index rallied 1 percent.
“This is good news and a relief,” said Bruno Ducros who helps oversee about $3.9 billion in equities at CamGestion in Paris. “The risk of a very strong slowdown in the U.S. had scared the market. It was a negotiation game before the election. Now, both sides are ready to agree.”
The S&P 500 erased its decline after the close of European trading on Nov. 16 after Boehner also said he would accept increased government revenue coupled with spending cuts.
Speaking at a news conference in Bangkok, Obama said “I am confident we can get our fiscal situation dealt with.”
Before Obama left for Asia, he met with senior Democrats and Republicans for talks to avoid a $607 billion-package of automatic tax increases and spending cuts that if allowed to come into force would push the country into a recession next year. Congress returns from its Thanksgiving holiday on Nov. 26.
The Stoxx 600 dropped 2.7 percent last week to its lowest level since Aug. 2 as concern mounted that U.S. lawmakers would fail to avert the so-called fiscal cliff. The gauge has lost 3.5 percent since the re-election of Obama on Nov. 6 set up a budget showdown with the Republican-controlled House of Representatives.
In the Middle East, Israel’s Defense Minister Ehud Barak said the army was prepared to invade the Gaza Strip for the first time in almost four years. Air strikes and rocket attacks have killed 71 Palestinians and three Israelis. Crude oil advanced for a second day in New York.
HSBC climbed 1.8 percent to 606.2 pence after the bank said it has held “discussions which may or may not lead to the sale of the shares” in the insurer. HSBC would raise $9.5 billion from its stake in China’s second-biggest insurance company based on its value before today’s open in Hong Kong.
BP gained 2.8 percent to 428.1 pence for the biggest contribution to the Stoxx 600’s advance. The Sunday Times did not say where it got the information. Mark Salt, a spokesman for the oil producer, declined to comment.
ING rose 2.2 percent to 6.65 euros after the European Commission extended the company’s deadline to sell the insurance businesses. ING pledged to repay state support from the Dutch government by 2015 under an amended restructuring plan.
SAS AB (SAS) soared 24 percent to 6.95 kronor after SAS Group won the backing of unions representing pilots and the bulk of its cabin crew to cut jobs and shrink the business.
Scandinavia’s biggest airline reached deals with seven of eight unions. SAS seeks to extend credit lines and cut costs by 3 billion kronor ($443 million). A Danish flight-attendant group continued to hold out hours after a midnight deadline set by the company for a deal had expired.
Copenhagen Airport A/S, the owner of the Nordic region’s biggest hub, added 2.4 percent to 2,025 kroner. SAS is the company’s largest customer.
Barclays Plc (BARC) climbed 3.7 percent to 242.9 pence after Goldman Sachs Group Inc. raised its recommendation for the shares to buy from neutral before the U.K.’s second-largest lender reveals details of its strategic review in February.
“If Barclays delivers on a business plan to generate returns that match the group’s cost of capital, the stock could offer sector-leading upside on our analysis,” Frederik Thomasen, an analyst, wrote in a note to clients dated Nov.16.
Hochtief AG jumped 5.4 percent to 37.93 euros, snapping a seven-day retreat, after the German builder announced the possible withdrawal of its chief executive officer, Frank Stieler, from the executive board. The potential management change led to speculation that parent company Actividades de Construccion & Servicios SA will complete it takeover of the builder, according to analysts at Commerzbank AG.
Ocado Group Plc (OCDO) surged 22 percent to 74.1 pence after the British online grocer extended a 100 million-pound credit line, the biggest of the company’s debts, by 18 months until July 2015. The retailer also said it will raise 35.8 million pounds through a sale of shares to existing investors at 64 pence apiece, ending doubts over the company’s immediate survival.
Fugro NV (FUR) sank 21 percent to 38.94 euros, its biggest plunge since 2003, after the Dutch oil-services company lowered its forecast for full-year profit to 280 million euros ($358 million). It cited low seismic-vessel utilization and a writedown at its subsea business.
The shares also fell after the company’s chief executive officer, Arnold Steenbakker, resigned because of a “difference of opinion” over the future direction of the company, according to a statement.