Investor confidence drives up share values

Eurostoxx 50: 2,215.45 (+61.68) Frankfurt DAX: 5,797.66 (+184.24) Paris CAC: 3,089.66 (+86.67):EUROPEAN STOCKS rose yesterday, with the Stoxx Europe 600 surging the most since May 2010, as investors speculated that recent losses have over-estimated the slowdown in the pace of economic growth.

The Stoxx 600 jumped 3.2 per cent to 230.57 in London, its biggest rally in 15 months.

“Shares look cheap,” Henrik Drusebjerg, a senior strategist at Nordea Bank in Copenhagen, said. “There’s no news out there suggesting investors should worry any more or less than yesterday.”

Of the 272 companies in the Stoxx 600 that have reported earnings since July 11th, 46 per cent have missed analysts’ estimates for per-share profit, while 44 per cent have beaten projections, according to Bloomberg.

The valuation of Stoxx 600 companies as a multiple of their estimated earnings has slipped to 9.4, near its lowest level since March 2009. National benchmark indexes rose in every western European market except Denmark and Greece.

The UK’s FTSE 100 increased 3.1 per cent and Germany’s DAX soared 3.3 per cent. France’s CAC 40 climbed 2.9 per cent.

Société Générale jumped 3.7 per cent to €23. Frederic Oudea chief executive officer asked France’s market watchdog on Wednesday to investigate moves in the lender’s share price. The cost of insuring the senior debt of France’s second-largest bank climbed 42 basis points to 379 basis points yesterday, according to CMA prices for credit-default swaps.

A gauge of bank stocks in the Stoxx 600 advanced 3.9 per cent. Banca Popolare di Milano jumped 10 per cent to €1.45, rebounding from Wednesday’s 8.9 per cent loss.

Salzgitter, a German steel maker, rallied 21 per cent to €45.39, its biggest surge since October 2008, after posting a first-half profit of €93.7 million, compared with a €3.5 million loss a year earlier.

ThyssenKrupp, Germany’s biggest steel maker, jumped 8.1 per cent to €23.23 as copper, lead, nickel, tin, and zinc all rallied on the London Metal Exchange.

Zurich Financial Services soared 10 per cent to 160.10 Swiss francs as Switzerland’s largest insurer posted second-quarter profit that beat analysts’ estimates. – (Bloomberg)