Tuesday, 4 December 2012

European Stocks Rise for Second Day; Oerlikon Climbs

By Sarah Jones - Dec 4, 2012 1:44 PM GMT+0400

European stocks climbed for a second day, erasing an earlier drop, as American lawmakers continued to debate plans to address the so-called fiscal cliff. U.S. index futures and Asian shares were little changed.
OC Oerlikon (OERL) Corp. rallied 4.5 percent as the world’s largest maker of textile machinery raised its earnings forecast and sold units. TUI Travel Plc gained 2.7 percent after Europe’s largest tour operator reported earnings that topped analyst estimates. United Internet AG (UTDI)tumbled 7.5 as Warburg Pincus LLC offered its 5.5 percent stake for sale.
European Stock-Index Futures Fluctuate Amid U.S. Budget Debate A sign sits outside the main entrance of the London Stock Exchange Group Plc's headquarters in London, U.K. Photographer: Jason Alden/Bloomberg
U.S. Treasury Secretary Timothy F. Geithner
Timothy Geithner, U.S. treasury secretary, said Republicans in Congress will be responsible for hurting the economy if they refuse to raise tax rates on the highest-income earners as part of a deal. Photographer: Andrew Harrer/Bloomberg
The Stoxx Europe 600 Index (SXXP) increased 0.3 percent to 276.9 at 9:42 a.m. in London. The gauge has climbed 18 percent from this year’s low on June 4, boosted by central-bank measures to support growth. The Reserve Bank of Australia today cut its benchmark interest rate for the sixth time in 14 months.
“We still anticipate a deal will be done to avoid the cliff,” Daniel Morris, global market strategist at JPMorgan Asset Management in London, said on Bloomberg Television. “We may go a bit over the fiscal cliff and scramble back up again but ultimately the impact, especially on the real economy, will not be significant. If you see equities sell off because of worries about the cliff, you should see that as a buying opportunity.”
Standard & Poor’s 500 Index futures rose less than 0.1 percent after the benchmark gauge for U.S. equities fell 0.5 percent yesterday. The MSCI Asia Pacific Index was almost unchanged for a second day.

Budget Talks

President Barack Obama’s administration rejected a Republican plan for tackling the fiscal cliff as it didn’t include higher tax rates for top-earning Americans, something the president has called essential. House Speaker John Boehnerproposed $1.4 trillion in spending cuts and $800 billion in new revenue by limiting tax breaks and capping deductions.
With the Republican blueprint, both parties now have their opening offers on the table. Obama’s proposed framework calls for $1.6 trillion in tax increases, $350 billion in cuts in health programs, $250 billion from other programs and $800 billion in assumed savings from the wind-down of the wars in Iraq and Afghanistan, according to administration officials.
Finance chiefs from the European Union’s 27 nations meet in Brussels today to discuss setting up a common bank supervisor as part of a wider crisis-fighting plan. French Finance MinisterPierre Moscovici told reporters yesterday he is “confident” Greece will pull off a successful bond buyback.

Greek Debt

European governments are counting on the buyback as a market-based way of cutting Greece’s debt, paving the way for continued aid payments. Finance ministers set a Dec. 13 meeting to release the next 34.4 billion euros ($45 billion) for Greece.
Oerlikon climbed 4.5 percent to 10.55 Swiss francs after the company raised its full-year guidance and announced the sale of its solar and natural fibers divisions to Chinese investor Pan Xueping’s Jinsheng Group.
The deal will bing proceeds of as much as 500 million francs ($539 million) to Oerlikon, Chief Executive Officer Michael Buscher said. The company predicted sales growth of more than 5 percent, with an order intake close to last year’s level and an operating margin gain of about 1 percentage point on its previous outlook.
TUI Travel (TT/) climbed 2.7 percent to 276.2 pence after the tour operator reported full-year underlying pretax profit of 390 million pounds ($626 million), beating the average analyst estimate of 357.9 million pounds, according to Bloomberg data. The company also increased its final dividend by 4 percent.

Elekta Gains

Elekta AB (EKTAB) jumped 6.2 percent to 101.80 kronor after the Swedish maker of radiation-surgery equipment reported second- quarter net income of 258 million kroner ($39 million) and sales of 2.49 billion kroner, topping analyst estimates.
United Internet retreated 7.5 percent to 16.03 euros, the biggest drop in 16 months, as UBS AG placed 11.9 million shares in the German phone company on behalf of Warburg Pincus, the third-largest shareholder. UBS is offering the stake at 16 euros to 16.50 euros apiece, according to terms of the deal obtained by Bloomberg News.
Electricite de France SA declined 1.7 percent to 14.05 euros after the biggest nuclear-reactor operator raised the cost estimate of developing the EPR plant in Normandy by 42 percent to 8.5 billion euros.
Norsk Hydro ASA (NHY) fell 1 percent to 26.83 kroner. Vale SA Chief Financial Officer Luciano Siani said at a presentation to investors at the New York Stock Exchange late yesterday that the company may consider selling its 22 percent stake in Europe’s third-largest aluminum producer.
Neopost SA (NEO) declined 5.4 percent to 38.32 euros after the French supplier of mail-room equipment lowered its annual sales- growth forecast to about 2 percent. That compares to a previous estimate of 2 percent to 4 percent. The company also cut its operating margin forecast to “slightly under 25 percent” from 25.5 percent.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net