'Santa rally' brings stocks good cheer

EUROPEAN STOCKS rose yesterday, extending the mini “Santa rally” on equity markets that emerged towards the end of the week. After a fortnight of falling markets, this week has seen some recovery in sentiment as positive economic figures from the US on durable goods orders and new home sales pushed markets up.

Yesterday’s half-day trading session extended gains made on Thursday, although trading was as thin as would be expected ahead of holidays.

DUBLIN

Tiny volumes of shares traded in the half-day session, as investors prepared for the Christmas break. The Iseq finished up 1 per cent at the lunchtime close.

Cement-maker CRH climbed 1.7 per cent to €14.96, after a report that the building group bought a roofing business called United Products in the US for an undisclosed sum, while Ryanair rose 1.2 per cent to €3.76.

Also among those advancing, DIY chain owner and builders merchants Grafton rose 4 per cent to €2.47, while exploration group Kenmare advanced 3.6 per cent to 54 cent.

The Iseq is now closed for business until next Wednesday.

LONDON

British stocks advanced, snapping two successive weekly losses, amid optimism that the US economic recovery will offset the impact of the euro zone debt crisis on global growth. BP, the second-biggest oil producer in Europe, gained 2.1 per cent as crude headed for its biggest weekly gain in two months.

The FTSE 100 added 55.73, or 1 per cent, to 5,512.70 at the 12:30 pm early close in London, the last trading session before the Christmas break.

The benchmark gauge gained 2.3 per cent this week and has rebounded 11 per cent from this year’s low on October 4th, amid mounting optimism that policymakers will agree measures to end the debt crisis.

US durable goods orders probably rose 2.2 per cent in November, while personal spending increased 0.3 per cent, according to the median forecasts of economists surveyed by Bloomberg.

In the UK, mortgage approvals unexpectedly fell in November as a darkening economic outlook prompted households to repay rather than add to debt, the British Bankers’ Association said today.

BP rose 2.1 per cent to 459.70 pence as oil climbed for the fifth straight day in New York. BG Group advanced 1 per cent to 1,348.50 pence after the Norwegian Petroleum Directorate said the company made an oil find in the North Sea.

Antofagasta, which owns copper mines in Chile, gained 2.4 per cent to 1,228 pence as copper advanced for the fourth day. Lloyds Banking Group, the biggest mortgage bank in Britain, fell 0.6 per cent to 25.69 pence.

EUROPE

The Stoxx Europe 600 Index rose 0.9 per cent to 241.83 at the close in London. The gauge has advanced 3.5 per cent this week and rebounded 13 per cent from this year’s low on September 22nd amid optimism that US economic growth is holding firm and euro-area leaders are moving to stem the region’s debt crisis.

Dutch manufacturer Wavin jumped 22 per cent after Mexichem SAB raised its bid for it by 11 per cent to €10 a share.

Despite this week’s rally, the Stoxx 600 has still tumbled 12 per cent this year as the debt crisis spread to Italy and Spain. Banks and commodity groups have posted the largest falls among 19 industry groups on the gauge, both slumping more than 30 per cent.

Due to the approach of the Christmas break, trading on the Stoxx 600 this week was 22 per cent below the average for 2011, according to Bloomberg.

National benchmark indexes climbed in all 18 western European stock markets, with Germany’s DAX gaining 0.5 per cent and France’s CAC 40 up 1 per cent.

On the policy front, departing European Central Bank executive board member Lorenzo Bini Smaghi said policymakers shouldn’t shirk from using quantitative easing if deflation became a danger to the euro region.

US

Stocks in the US also rose, pushing the Standard Poor’s 500 Index to a 0.6 per cent yearly rally, as expansion in US industrial purchases and stronger new home sales offset weaker-than-forecast consumer spending.

Bank of America Corp and Walt Disney Co rose at least 2 per cent, pacing gains among the largest companies. ATT Inc advanced 0.7 per cent after it won approval for its $1.93 billion purchase of Qualcomm Inc airwaves. Rambus Inc jumped 12 per cent as the designer of high-speed memory chips settled patent disputes with Broadcom Corp.

Financial stocks climbed 0.7 per cent, after dropping as much as 0.2 per cent. The SP 500 increased 0.9 per cent to 1,265.33 yesterday. The Dow Jones Industrial Average gained 124.35 points, or 1 per cent, to 12,294, the highest since July 27th, when a political battle about the US debt ceiling was leading stocks on seven-day decline.

The four-day rally in the SP 500 this week brought the index to a 0.6 per cent advance for the year. The gauge gained 3.7 per cent this week. – (Additional reporting: Bloomberg)