European values rise on ECB hopes

Eurostoxx 50: 2,471.53 (+0.61%) Paris CAC: 3,488.38 (+0.23%) Frankfurt DAX: 7,040.88 (+0.64%)

EUROPEAN STOCKS rose to their highest point in more than a year as a positive Friday session rounded off the 11th successive week of rallies amid optimism that European Union policymakers will intervene to shore up the banking sector.

Expectations for European Central Bank action to combat the euro zone debt crisis continued to provide the main underlying support for equity markets, while better-than-expected consumer sentiment data from the US also kept investors happy.

DUBLIN

THE ISEQ index rose 1 per cent in tandem with the gains in markets across Europe, with index heavyweights CRH and Ryanair both gaining. Building materials group CRH, the largest stock on the index, rose 3 per cent to €14.68, while Ryanair advanced 1.6 per cent to €4.14.

Food group Kerry declined almost 1.3 per cent to €37.70, while industrial holdings group DCC also counted among the fallers, slipping back almost 1 per cent to €20.80.

Independent News Media fell more than 8 per cent to 18 cent after APN, the Australasian media group in which it has a 29.5 per cent stake, published results showing a widening in its first-half losses.

Insulation-makers Kingspan rose 5 per cent to €7.25. The stock is due to report its interim results next week, with analysts at Davy Research forecasting “clear outperformance over the medium term” in a note to investors.

LONDON

THE UK’S top shares posted modest gains, but in low volumes, with the blue chip FTSE 100 index ending only fractionally above where it started the week.

At the close, the FTSE 100 index was up 17.91 points, or 0.3 per cent, at 5,852.42, having closed last week at 5,847.11.

Banks found support from the euro zone expectations, reflecting lenders’ direct exposure to the regions sovereign bonds, with Lloyds Banking Group the best blue chip performer, up 3.7 per cent.

Energy stocks were also in demand, recovering after a dip in the previous session. Miners, however, failed to benefit from the risk-on rally, having already proved resilient on Thursday thanks to firm metal prices and sector consolidation moves.

Stocks seen as more defensive, such as drugmakers and utilities, were shrugged aside. Water firm Pennon was among the fallers, down 0.3 per cent, as its latest trading update proved cautious, with the stock also weighed by a downgrade by HSBC Securities.

Petroneft Resources, which is also listed in Dublin, rose 18 per cent in London trading as it continued its recovery since this week’s operational update.

EUROPE

National benchmark indexes advanced in all of the 18 western European markets except Denmark. Among the major markets, France’s CAC 40 Index gained 0.2 per cent and Germany’s DAX index increased 0.6 per cent.

Europe’s benchmark stock index, the Stoxx Europe 600 Index added 0.6 per cent, rising to its highest level in 13 months as Spain’s 10-year bond yield fell to a six-week low amid easing concern over the debt crisis.

Spanish banks Bankinter and Bankia rallied more than 2 per cent on speculation the EU will disburse the first instalment of a €100 billion bailout facility to Spain’s lenders.

Swiss Life rose 3.1 per cent to 104.90 Swiss francs, after the Zurich-based insurer said first-half profit dropped 11 per cent – although the year-on-year comparison was unflattering due to a previous tax benefit on the disposal of assets, its income was higher than had been expected.

Brewing giant Heineken slid 1.5 per cent to €43.14 on a report it may raise its bid for the rest of Asia Pacific Breweries.

Air France-KLM Group, Europe’s biggest airline, rallied 3.7 per cent to €4.41. The carrier’s biggest pilot union voted to back a management plan that will reduce staff strength in the coming years.

US

Stocks in New York were little changed, after the Standard and Poor’s 500 Index reached its highest level since April, as investors weighed better-than-estimated data on consumer confidence and leading indicators.

Retailer Gap jumped 4.7 per cent after it reported a 29 per cent rise in quarterly profit and raised its full-year earnings forecast.

Bank of America, Caterpillar and United Technologies climbed more than 1 per cent to lead gains in the Dow Jones Industrial Average, while in the pharmaceutical sector Merck, Johnson and Johnson and Pfizer led declines that left the 30-stock gauge little changed.

Reports on US consumer confidence and leading economic indicators added to optimism about the economy.

The Thomson Reuters/University of Michigan preliminary August index of consumer sentiment increased to 73.6, the highest since May, from 72.3 the prior month. – (Additional reporting: Bloomberg/Reuters)