Stocks rise on Greek bailout deal hopes

MARKETS HAD a strong end to a tumultuous week which was dominated by concerns about Greece.

European stocks advanced for a third day yesterday, pushing the Stoxx Europe 600 Index to a six-month high, as investors speculated that euro area officials are nearing an agreement on a bailout for Greece.

Although US stocks increased for the first time in four days, markets pared early gains later in the day.

DUBLIN

THE ISEQ index finished up 1.5 per cent.

Financial stocks were the best performers, in line with the European trend, as banks across the board gained from speculation that Greece was close to a deal.

Irish Life and Permanent and AIB both made significant gains, while the more significant player, Bank of Ireland, added 11 per cent to €0.14, on decent volume.

Construction stocks also had a good day.

CRH closed up 5 per cent at €16.12, on the back of strong results from peer company Lafarge overnight, while construction giant Saint Gobain posted results in line with expectations

DIY company Grafton advanced 4 per cent to close at €3.02.

The Irish stock benefitted from the news that an interim examiner has been appointed to the group operating the Brooks, Heat Merchants and Tubs and Tiles businesses .

Dragon Oil, which is also listed in London, added 1.5 per cent to €6.55 in Dublin, after the Dubai-based oil company said it was considering an offer for BowLeven Plc.

Meanwhile Kerry Group closed down more than ½ per cent at €30.68 ahead of full-year results next Tuesday.

LONDON

UK STOCKS rose for the first time in four days as investors speculated government officials may be nearing an agreement on a bailout for Greece and the US economy is recovering. Banks, led by HSBC Holdings, pulled the benchmark FTSE 100 Index higher.

Rio Tinto gained as copper advanced for the first time in six days. Anglo American advanced 1.4 per cent after after the producer of metals and minerals from Africa to Brazil said that underlying earnings increased to $5.06 a share in 2011 from $4.13 a share in 2010.

BowLeven, a UK oil explorer working in Cameroon, soared 69 per cent as Dragon Oil said it is considering a takeover offer. Ashmore fell 1.6 per cent after HSBC cut its rating.

EUROPE

THE EUROPE Stoxx 600 climbed to 266.07, its highest level since August 1st, amid hope that Greece was nearing a deal.

A gauge of European banks advanced 1.3 per cent making the biggest contribution to the Stoxx 600’s rally. Société Générale, France’s second-largest lender, jumped 5.5 per cent to €23.79. Santander, Spain’s biggest bank, increased 2 per cent to €6.41. RBS climbed 3.5 per cent to 27.68p and Barclays added 1.3 per cent to 248p.

Anglo American added 1.2 per cent after posting annual earnings that exceeded analysts’ estimates. Lafarge, the world’s biggest cement maker, soared 7.7 per cent as operating income beat projections.

“An agreement on Greece seems near,” said Benoit Peloille, equity market strategist at Natixisin Paris.

Greece’s ASE Index rose 5 per cent, in the biggest gain among western-European markets as the Mediterranean nation’s lenders advanced. Piraeus Bank rallied 14 per cent to €0.64.

Alpha Bank surged 16 per cent to €1.81.

National benchmarks gained in every market except Norway. France’s CAC added 1.3 per cent, while Germany’s DAX Index increased 1.4 per cent.

Construction stocks rose 2.8 per cent for the biggest gain among the 19 industry groups in the Stoxx 600. Lafarge jumped 7.7 per cent to €34.30, its largest rally since November, as the cement maker reported that fourth-quarter operating income excluding some items rose 3 per cent, beating estimates.

Smaller rival Holcim increased 4.2 per cent to 58.35 Swiss francs.

US

US STOCKS were little changed as optimism among European leaders about a Greek bailout failed to lift the Standard and Poor’s 500 Index above last year’s peak.

Gilead Sciences, which bought Pharmasset for $10.8 billion last year to gain an experimental hepatitis C drug, plunged 15 per cent as some patients on that medicine relapsed after stopping therapy. HJ Heinz a ketchup maker, and Campbell Soup added at least 2.7 per cent as earnings beat projections.

General Mills, the maker of Cheerios cereal and Yoplait yogurt, slumped 3.6 per cent after cutting its profit forecast amid weak demand. – (Additional Reporting: Reuters/Bloomberg)