Markets rebound despite mixed data

MARKETS RALLIED in Europe yesterday as investors calculated that the recent sell-off of stocks was overdone.

The recent slump has left many stocks at valuations that are making them attractive to longer-term investors, according to analysts.

“There are definitely long-term investors that look beyond whatever happens in the next one to two years, who are in the market to buy on historically attractive valuations,” said Henrik Drusebjerg, a senior strategist at Nordea Bank AB in Copenhagen.

“We’re allocating considerable funds to defensive stocks to stay in while avoiding the biggest downside risks.”

The rebound came despite mixed economic news. Data from the US showed orders for computers, machines and other capital equipment fell for the second month in a row in April, indicating a slowdown in investment, and a survey showed that business confidence is low.

The rally may be short-lived, as US stocks began slipping in New York as European markets closed yesterday.

DUBLIN

THE DUBLIN market benefited from the general rally around Europe. Ryanair was one of the more significant movers on the back of news that jet kerosene prices fell slightly and generally good sentiment towards airlines.

The stock rose 3.38 per cent to €4.04. Dealers pointed out the stock was sold heavily last week ahead of its results on Monday.

By contrast, its local rival, Aer Lingus, in which Ryanair is a shareholder, fell more than 6 per cent to close at 91 cent. Traders said the fall was mainly on the back of aggressive selling by one shareholder.

International packaging group, Smurfit Kappa rose 3.67 per cent to close at €5.65. Bookmaker Paddy Power gained 2.48 per cent to €51.34, as reports indicated that the Australian authorities are preparing to allow in-play betting on sports events.

The Irish group owns Australia’s biggest online betting business and stands to gain from such a change in the law.

Food ingredients group Kerry was one of the most significant fallers, giving up 3 per cent just before the close to €32.7. However, dealers pointed out that it had traded at between €33.7 and €33.8 during the day.

LONDON

BRITAIN’S BENCHMARK index recovered from stinging losses during the previous session as bargain hunters snapped up beaten-down financial and commodities stocks, although traders said any rally could prove short-lived.

Mining companies were among the best performers. Randgold increased 8 per cent to 5,170p, Vedanta Resources gained 5 per cent to 999.5p and Rio Tinto rose 1.7 per cent to 2,838.5p.

Cable Wireless Communications jumped 18 per cent to 33.01p, the biggest gain since 2003. The UK-based mobile-phone network operator reported earnings before interest, taxes, depreciation and amortisation of $901 million, beating analysts’ estimates of $884.5 million, and said it expected similar levels through 2012 and 2013.

Banks also rebounded yesterday. Barclays gained 2.7 per cent to 185.3p, Royal Bank of Scotland increased 1.9 per cent to 21.44 pence, and HSBC Holdings added 1.4 per cent to 514.8 pence.

EUROPE

THE STOXX Europe 600 Index rose 1 per cent to 241.91 at the close of trading. The benchmark gauge had retreated for three straight weeks, driving its valuation to 9.9 times estimated earnings, near the cheapest since January, according to data compiled by Bloomberg.

KBC jumped 3 per cent to €12.49, while ING added 2.1 per cent to €4.81. Banco Bilbao Vizcaya Argentaria SA rose 2.5 per cent to €4.93. Spain’s second-largest lender will take non-binding bids for five portfolios of homes, non-performing loans and consumer loans until May 29th, according to sources.

Utilities Eon and RWE climbed 2.1 per cent to €15.31 and 2.2 per cent to €29.99 respectively. Commerzbank raised its recommendation on Eon to buy from hold and on RWE to hold from reduce.

Sonova Holdings AG, the Swiss owner of the Phonak hearing aid brand, rose 3.3 per cent to 86.80 Swiss francs after HSBC Holdings analyst Jan Keppeler advised clients to buy its shares.

Bankia SA, the listed unit of BFA Bankia, dropped 7.4 per cent to €1.57, after Spain’s economy minister Luis de Guindos said the government would recapitalise its parent with as much public money as necessary.

US

US STOCKS ended slightly higher in a third session marked by late- day swings, but the Nasdaq fell after NetApp gave a weak revenue forecast, casting doubt on the outlook for tech spending.

Major indexes were lower for much of the session, as investors found little reason to buy following three days of gains. However, Wall Street reversed course late in the session and the SP extended its gains to a fourth straight day – (Additional reporting Bloomberg)