European stocks at their best in a month
European stocks climbed the most in almost four weeks as companies from Munich to BP beat earnings estimates and a measure of euro-zone services output shrank less than forecast.
There were also further signs that the British economy might avoid a triple-dip recession, with a purchasing managers survey for the powerhouse services sector recording a return to growth in January.
Although trading was flat yesterday, what activity there was did outperform Monday’s, allowing for many stocks that lost ground to bounce back.
Ryanair, having released its statement on the proposed deal with the British carrier Flybe, was slightly disappointing, down 1 per cent to €5.54.
Bank of Ireland was down 1.4 per cent to €0.13 but had outperformed the previous day’s trading. There was a decent volume in Glanbia which finished strongly up 2.5 per cent to close at €8.31.
Smurfit also recovered closing at €10.05, up 1 per cent, while there was also good volume in Paddy Power, which finished down 1 per cent at €60.58.
A bigger than expected profits haul from BP helped the FTSE 100 Index regain its poise as economic cheer also boosted sentiment. The index staged a recovery after Monday’s 100- point slump on concerns over the euro zone, which brought the market’s spectacular new year rally to an abrupt halt.
BP added 1 per cent or 6.7p to 468.7p after it posted positive fourth quarter profits of $4 billion. Arm Holdings, whose chip designs are used in Apple products, was also near the top of the risers’ board after it reported fourth quarter results ahead of market expectations. Shares were 39p higher at 931p, or 4 per cent.
Banking shares were back in favour. Barclays was 3.8p higher at 295.25p and Royal Bank of Scotland was 8.9p higher at 337.5p, as investors waited for news of its fine over the Libor rate-rigging scandal, which is expected this week.
There was better news from Europe after a survey of the manufacturing and services sectors showed activity rose to a 10- month high in January across the euro zone. This helped the German DAX and France’s CAC 40 also return to positive territory.
KPN slumped 16 per cent to €3.45 after the biggest phone company in the Netherlands posted a fourth quarter net loss of €162 million.
Tele2 plunged 10 per cent to 102.90 kroner, the biggest decline since May 2011. The Stockholm-based telecommunications company posted fourth quarter net income of 565 million kroner, compared with the average analyst estimate of 1.17 billion kroner.
Allianz, Europe’s largest insurer, advanced 1.7 per cent to €103.80, its biggest gain in a month. Deutsche Telekom, Europe’s second-largest telecommunications company, slipped 0.6 per cent to €8.79.
US stocks recovered a day after the market’s biggest sell-off since November, as stronger-than-expected earnings brightened the profit picture.
Dell stock rose after the world’s number three computer-maker agreed to be taken private in a $24.4 billion deal, the largest leveraged buyout since the 2008-2009 financial crisis. The stock gained 1.1 per cent to $13.42.
In earnings, Estee Lauder reported a higher quarterly profit and raised its full-year profit forecast. The stock rose 6 per cent to $64.71.
On the down side, McGraw-Hill shares slumped 10.7 per cent to $44.92 after the US justice department filed a civil lawsuit seeking $5 billion over mortgage bond ratings. Standard Poor’s, a McGraw Hill unit, was accused of inflating ratings and understating risk out of a desire to gain more business from investment banks.
Advancers outpaced decliners on the NYSE by nearly 11 to four and on the Nasdaq by about three to one. – (Additional reporting: PA, Reuters, Bloomberg)