Stocks rise on ECB stimulus expectations

Worldwide stock indexes rose yesterday and European bond yields fell on expectations of more stimulus from the European Central Bank, while strong US data on durable goods and consumer confidence underpinned US shares.

Speculation grew that the European Central Bank is preparing large-scale asset purchases to weaken the euro and try to jump-start growth in the struggling euro zone.

DUBLIN

Dublin ended in positive territory in what a broker described as a “quiet day with some investors remaining on holiday”.

Larger stocks with exposure to the United States rose on good economic news from there. CRH added almost 1 per cent to €17.79 and the Kerry Group was up 0.58 per cent to €57.15. Hotel stock Dalata was down 1.17 per cent to €2.95, but a broker said the stock may be helped today by a new report by Crowe Horwath showing recovery in the Dublin hotel market.

Independent News & Media was up a modest 1.54 per cent to 13 cent. The company released new figures showing growing online numbers yesterday but a broker said investors still wanted to know more about how INM "intends to make money out of this".

LONDON

Blue-chip stocks were on the front foot after the long weekend as traders caught up with advances on Wall Street spurred by optimism over the US economy.

The pound's recent strength was a factor in corporate updates as it has caused a headache for UK-listed firms with overseas earnings. This was highlighted by cleaning and household supplies firm Bunzl and advertising and marketing giant WPP, although shares in the FTSE 100 pair were still higher despite the impact on half-year results.

Bunzl, which supports businesses worldwide by supplying items such as carrier bags and other packaging, reported a 2 per cent rise in profits to £132.3 million, although the figure would have been 11 per cent higher without currency movements. Shares were 9p stronger at 1639p, leaving the FTSE 100 stock up 13 per cent since the start of the year.

Marketing and advertising giant WPP climbed 17p to 1244p after reporting a 1.5 per cent rise in profits to £532 million as it developed business in the UK and US to offset weaker trading in continental Europe.

Primark owner Associated British Foods improved 59p to 2871p after analysts at JP Morgan Cazenove said they expected the fashion chain to double profits over five years.

EUROPE

Euro zone blue chips recorded their biggest two-day gain in over a year yesterday, boosted by the prospect of further stimulus from the European Central Bank and by strong gains for some steelmakers.

Steelmakers ArcelorMittal, Salzgitter and Voestalpine were among top gainers in Europe after analysts at UBS upgraded their shares to "buy" from "sell" in expectation that the trio will benefit from a turnaround in the sector.

The possibility of fresh ECB stimulus also helped the market to take a French government reshuffle in its stride. Paris’s CAC-40 index was up 1.2 per cent.

NEW YORK

US stocks rose, sending the Standard and Poor’s 500 Index above 2,000, after a report showed the biggest jump to date in durable-goods orders as consumer confidence unexpectedly increased.

Amazon. com

added 2.5 per cent after the company said it was buying video-game service Twitch Interactive in one of its biggest acquisitions.

Best Buy

dropped 6.5 per cent after posting a same-store sales decline that was steeper than analysts had projected.

Tim Hortons rose 8.5 per cent after Burger King Worldwide agreed to buy the coffee- and-doughnuts chain in an $11.4 billion cash-and-share deal.

Data yesterday showed orders for US durable goods jumped 23 per cent in July as bookings surged for commercial aircraft.

– (Additional reporting Bloomberg, Reuters, PA)