European stocks climb as company earnings bolster confidence

April 25, 2011 - 0:0

European stocks climbed this past week, recovering from a selloff, as earnings from Intel Corp. and Apple Inc. to PSA Peugeot Citroen and L’Oreal SA spurred investor optimism in the global economic recovery.

Infineon Technologies AG, Europe’s second-largest chipmaker rallied more than 3 percent. Peugeot and Fiat SpA led gains in carmakers, while L’Oreal, the world’s biggest cosmetics maker, climbed more than 2 percent in Paris.
The benchmark Stoxx Europe 600 Index gained 1 percent in the holiday-shortened week as 37 of the gauge’s companies reported earnings. The measure sank 1.7 percent on April 18, the largest drop in a month, after Standard & Poor’s cut its credit outlook for the U.S., the world’s largest economy.
“We continue to favor equities as our preferred asset class,” said Tristan Hanson, head of asset allocation at Jersey, Channel Islands-based Ashburton Ltd., which oversees $1.7 billion. “Behind the scenes, corporate profits and cash flows have continued to recover strongly from the crisis.”
National benchmark indexes climbed in 10 of the 18 western European markets. Germany’s DAX Index rose 1.6 percent, France’s CAC 40 Index climbed 1.2 percent and the U.K.’s FTSE 100 Index rose 0.4 percent. Western European stock markets were closed April 22 for the Good Friday holiday.
Greece’s ASE Index and Portugal’s PSI-20 Index were the region’s worst performing markets, falling 2.6 percent and 1.7 percent respectively as the cost of insuring debt sold by the countries rose to records.
-----------------Infineon, ARM holdings
Infineon led technology shares higher, jumping 6.1 percent after the company said second-quarter sales and profitability beat its own forecasts. The shares also advanced after Intel, the world’s biggest chipmaker, posted first-quarter profit that beat analysts’ projections.
ARM Holdings Plc climbed 1.6 percent as Apple reported second-quarter profit that almost doubled to $5.99 billion, boosted by sales of smartphones. ARM designs chips that are used in Apple’s iPhones.
Of the western European companies that that reported earnings since April 11, profits have topped estimates by an average of 5 percent, according to data compiled by Bloomberg. In the U.S., companies on the Standard & Poor’s 500 Index have beaten forecasts by an average of 9.7 percent.
Peugeot rallied 7.3 percent after Europe’s second-biggest carmaker posted a 10 percent increase in first-quarter revenue. Fiat advanced 6.8 percent, even as the company said it will pay $1.27 billion to build a 51 percent stake in Chrysler Group LLC two years earlier than planned.
---------------L’Oreal, Synthes gain
L’Oreal rose 2.1 percent after first-quarter sales beat the average analyst estimate.
Other companies including LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury-goods group, and Burberry Group Plc, Britain’s biggest luxury-goods retailer, posted sales that topped analysts’ projections. LVMH jumped 6.5 percent and Burberry surged 10 percent.
Elsewhere, Synthes Inc. soared 7.1 percent after the biggest maker of devices to treat bone fractures and trauma confirmed it has held talks about a possible takeover by Johnson & Johnson.
Alpha Bank SA led a selloff in Greek banks, tumbling 12 percent as investors charged a record amount to insure Greece’s debt obligations. German officials said the Mediterranean nation will probably have to restructure its debt even after the nation’s Finance Minister George Papaconstantinou said late last week in Washington that the country has no such plans.
--------------Popolare di Milano
Banca Popolare di Milano Scarl sank 13 percent after the Italian lender announced plans to raise as much as 1.2 billion euros ($1.75 billion) by selling new shares. The Bank of Italy had asked the country’s oldest cooperative bank to strengthen its capital. The Milan-based bank will ask shareholders at a meeting in June to approve the plan.
Royal KPN NV, largest Dutch telephone company, slipped 8.3 percent after lowering its earnings forecast for 2011 and outlining plans to eliminate as much as 25 percent of its workforce. TeliaSonera AB, Sweden’s biggest phone company, declined 3.8 percent after posting first-quarter net income of 4.65 billion kronor ($763.7 million). That fell short of analysts’ estimates.