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Thursday, 29 August 2013
European Stocks Rise, Erase Monthly Drop; Vodafone Surges
By Inyoung Hwang - Aug 29, 2013 2:41 AM PT
European stocks rose, snapping a three-day drop, as investors awaited data on U.S. economic growth and Vodafone (VOD) Group Plc surged to an 11-year high. U.S. index futures and Asian shares also climbed.
Vodafone jumped 9 percent after saying Verizon Communications Inc. is in talks to acquire its stake in their Verizon Wireless venture. A gauge of European telecommunications companies rose to a two-year high. Carrefour SA rallied the most in two months after posting a 4.9 percent increase in first-half profit. Zurich Insurance Group AG declined 2.3 percent as Chairman Josef Ackermann resigned.
Vodafone surged 8.6 percent to 205.65 pence, its highest price since January 2002. Photographer: Chris Ratcliffe/Bloomberg
The Stoxx Europe 600 Index added 0.5 percent to 299.44 at 10:39 a.m. in London, erasing its monthly drop. The gauge lost 2.2 percent in the past three days, closing yesterday at a six-week low, on concern the U.S. will take military action againstSyria. Secretary of State John Kerry this week said America will hold Syria accountable for the chemical-weapon attacks that opposition groups say killed as many as 1,300.
“I don’t think the Syria crisis will have that strong an impact on the markets on a longer-term horizon,” Tobias Britsch, who helps oversee $33 billion as European equities asset manager at Meriten Investment Management GmbH, said by telephone from Dusseldorf, Germany. “Over a six-to-12-month horizon, I’m quite optimistic for equity markets. We’re not out of the woods, but we’re in a better place than we were.”
The volume of shares changing hands in companies listed on the Stoxx 600 was 15 percent higher than the 30-day average, data compiled by Bloomberg showed. The Standard & Poor’s 500 Index futures gained 0.2 percent today, while the MSCI Asia Pacific Index rose 0.6 percent.
In the U.S., revised Commerce Department data at 8:30 a.m. Washington time may show the economy grew at a 2.2 percent annualized rate in the second quarter, according to a Bloomberg News survey, compared with the initial reading of 1.7 percent. A separate report may show applications for jobless benefits fell by 4,000 to 332,000 last week.
In Germany, unemployment unexpectedly increased in August, for the first time in three months. The number of people out of work increased by a seasonally adjusted 7,000 to 2.95 million, the Nuremberg-based Federal Labor Agency said. Economists in a Bloomberg survey had predicted a decline by 5,000. The adjusted jobless rate stayed at 6.8 percent, near a two-decade low.
Vodafone surged 9 percent to 206.4 pence, its highest price since January 2002. Europe’s biggest wireless carrier said it is in talks with Verizon to sell its 45 percent stake in their Verizon Wireless venture.
The transaction may be valued at $130 billion, people with knowledge of the matter said. At that price, the deal would be the biggest since Vodafone’s acquisition of Mannesmann AG in 2000 and would give the U.K. carrier’s finances a boost as it tries to revive operations hurt by Europe’s debt crisis.
A gauge of telecommunications stocks rallied the most since August 2011, posting the best performance among the 19 industry groups in the Stoxx 600. Telecom Italia SpA, Italy’s largest phone company, increased 3.1 percent to 0.50 euros. Orange SA climbed 2.4 percent to 7.76 euros.
Carrefour (CA) rose 4.8 percent to 23.87 euros, for its biggest increase since June 26. France’s largest retailer reported a 4.9 percent increase in first-half profit as more consistent pricing and improved store management helped stabilize domestic revenue. Recurring operating income advanced to 766 million euros ($1.02 billion), in line with the median analyst estimate of 767 million euros.
Melrose Industries Plc (MRO) advanced 3.7 percent to 294.8 pence, its highest price since it sold shares to the public in October 2003. The owner of Brush Turbogenerators said first-half sales more than doubled from a year earlier.
WPP Plc climbed 4.1 percent to 1,226 pence. The world’s largest advertising company said first-half sales increased 7.1 percent on stronger growth in the U.K. and North America, helping counter a slowdown in Asia and Africa.
Baloise Holding AG (BALN) gained 1.8 percent to 99.45 Swiss francs. Switzerland’s third-biggest insurer said higher non-life sales pushed up first-half net income to 244.8 million francs ($265 million), from 218.3 million francs in the year-before period. The company also said it is on track to meet its financial targets.
Zurich Insurance declined 2.3 percent to 229.10 francs. Ackermann is resigning from the board with immediate effect after the company’s finance chief Pierre Wauthier committed suicide. He will be replaced by Vice Chairman Tom de Swaan.
“The unexpected death of Pierre Wauthier has deeply shocked me,” Ackermann said in a statement. “I have reasons to believe that the family is of the opinion that I should take my share of responsibility, as unfounded as any allegations might be.”
Vienna Insurance Group AG lost 3.8 percent to 39.33 euros. Austria’s biggest insurer reported second-quarter pretax profit of 46.3 million euros, falling short of the average analyst estimate of 67.8 million euros.
Serco Group Plc tumbled 12 percent to 534.5 pence for the biggest drop since October 2008. The U.K. government said police are investigating suspected fraud by Serco staff in a contract for prisoner escorting and custodial services. The Ministry of Justice gave the company three months to improve governance and said the company may be excluded from all government contracts if it failed to do so.