European Stocks Rise, Led by BP, Anglo American, France Telecom

By Adria Cimino

June 30 (Bloomberg) -- European stocks rose, trimming the Dow Jones Stoxx 600 Index's biggest first-half decline since at least 1987, as record oil and higher metals prices lifted commodity producers.

BP Plc and Anglo American Plc climbed after crude topped $143 a barrel and gold had its fourth straight quarterly gain. Nestle SA, the world's biggest food company, and Roche Holding AG, the largest maker of cancer medicines, led an advance by companies whose earnings are less tied to the pace of economic growth. France Telecom SA rallied after Europe's third-biggest telephone company ended its bid for TeliaSonera AB.

The Stoxx 600 added 0.7 percent to 289.39, leaving the index with a 2008 drop of 21 percent. The Stoxx 50 increased 1.1 percent, and the Euro Stoxx 50, a measure for the euro region, increased 0.4 percent.

Record oil ``is a boon for energy companies,'' said Franz Wenzel, Paris-based deputy director for investment strategy at AXA Investment Managers, which oversees about $831 billion. We're also ``saying play the defensives. We see the possibility to pass on the inflation burden to the consumer,'' he said.

More than $9.2 trillion was erased from equity markets worldwide this year through last week as $400 billion in bank credit-related losses and oil at all-time highs offset efforts by central banks to bolster confidence in financial markets.

Inflation

Inflation in Europe accelerated more than economists forecast this month to 4 percent, the highest in more than 16 years, the European Union statistics office said today.

The Stoxx 600 has lost 10 percent this month as rising prices stoked speculation central banks may now have to lift borrowing costs to contain inflation. Those concerns reversed a two-month rally that began in March following the Federal Reserve-led bailout of Bear Stearns Cos. and the most aggressive series of U.S. interest-rate cuts since the 1980s.

European Central Bank President Jean-Claude Trichet this month signaled the ECB may raise rates as soon as this week. The Fed on June 25 kept rates on hold, saying ``upside risks'' to prices have increased.

BP, Europe's second-largest oil company, gained 3.2 percent to 583.25 pence. Total SA, the region's biggest refiner, increased 2.4 percent to 54.20 euros.

Crude climbed to a record, completing the biggest quarterly increase in nine years, on concern Israel may attack Iran over its nuclear program and disrupt supply from OPEC's second- largest producer.

Oil for August delivery increased as much as 2.5 percent to $143.67 in New York.

Anglo American

Anglo American, the world's second-biggest mining company, added 3.8 percent to 3,526 pence. BHP Billiton Ltd., the third- largest, rose 2.4 percent to 1,920 pence.

Gold gained in London as weakness in the dollar spurred demand for the metal as an alternative investment to the U.S. currency. Platinum and silver also advanced.

Nestle, the maker of Nescafe and KitKat chocolates, rallied 2.1 percent to 46.16 francs.

Roche advanced 5.1 percent to 184 francs. Analysts speculated sales of its Avastin tumor drug increased more than expected.

``We're hearing that there was an uptick in sales of Avastin,'' said Ben Yeoh, an analyst at Dresdner Kleinwort in London.

Earnings momentum for European pharmaceutical companies will continue, Gbola Amusa, a London-based analyst at UBS AG, wrote in a report to clients.

`Prudent Approach'

France Telecom jumped 7.2 percent to 18.71 euros. The French company withdrew its unsolicited bid to buy TeliaSonera for 244 billion kronor ($40.8 billion) after the Swedish company rejected the offer as too low.

Societe Generale SA raised its recommendation on France Telecom to ``buy'' from ``hold,'' saying withdrawing its takeover bid should ``reassure investors as to the group's prudent financial approach to mergers and acquisitions.''

TeliaSonera lost 10 percent to 44.6 kronor.

Holcim Ltd. sank 1.3 percent to 82.75 francs. Exane BNP Paribas downgraded the world's second-largest cement maker on concern demand will slow, cutting its recommendation to ``neutral'' from ``outperform.''

Leading Indicators

Kingspan Group Plc sank 2.9 percent to 6.167 euros. Europe's largest maker of flooring and insulation panels was also lowered to ``neutral'' from ``outperform'' at Exane. Imerys SA dropped 4.2 percent to 46.01 euros. The world's biggest producer of minerals used to whiten paper and add colors to paint had its recommendation lowered to ``underperform'' from ``neutral.''

``Construction leading indicators have continued to decline in the U.S. and most West European countries and imply a further fall in demand for building materials in 2009,'' the brokerage wrote in a note.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
Last Updated: June 30, 2008 12:48 EDT