Stocks in Europe, Asia Advance on Earnings; U.S. Futures Gain

By Michael Patterson

July 30 (Bloomberg) -- Stocks in Europe and Asia climbed the most in a week after Siemens AG, ArcelorMittal and Matsushita Electric Industrial Co. reported earnings that beat analysts' estimates. U.S. index futures gained.

Europe's Dow Jones Stoxx 600 Index and Standard & Poor's 500 Index futures rose to their highest levels of the day after a private report showed U.S. employers unexpectedly added jobs in July and the Federal Reserve extended emergency lending programs to Wall Street firms.

Siemens, the region's largest engineering company, had its steepest advance in four months after orders for power plants and generator upgrades boosted profit. ArcelorMittal jumped the most since January as earnings at the world's biggest steelmaker more than doubled. Matsushita, the largest consumer-electronics maker, rose in Japan. Ryanair Holdings Plc and Singapore Airlines Ltd. led gains in carriers as oil traded near a 12-week low.

The MSCI World Index added 0.7 percent to 1,362.32 at 1:52 p.m. in London as all 10 industry groups increased. More than $11 trillion has been erased from global equities in 2008 as almost $474 billion in credit-related losses and accelerating inflation prompted analysts to cut their profit projections.

``Earnings have been good,'' said Matthieu Bordeaux-Groult, a fund manager at Richelieu Finance in Paris, which oversees $6.2 billion. ``Results that are in-line are saluted and beating estimates is even better.''

Europe's Stoxx 600 Index advanced 1.4 percent after shares of ThyssenKrupp AG and Deutsche Postbank AG also rallied. The MSCI Asia Pacific Index jumped 1.5 percent. Futures on the S&P 500 rose 0.5 percent as Fannie Mae and Freddie Mac gained.

Earnings Estimates

U.S. stocks climbed yesterday, sending the S&P 500 to a 2.3 percent advance, after Merrill Lynch & Co. secured new capital and U.S. Steel Corp. surged the most in seven years on higher- than-projected earnings.

Profits at companies in the Stoxx 600 may fall 2.6 percent on average this year, according to analysts' estimates compiled by Bloomberg. That's down from a forecast for 11 percent profit growth at the start of this year.

Companies in the S&P 500 are set to report the biggest drop in quarterly earnings since 1998, when Bloomberg began tracking the data. Profits excluding certain items at the 291 companies in the S&P 500 that reported second-quarter results so far declined 24 percent from a year earlier, according to Bloomberg data.

All of the 23 developed nations in the MSCI World except for Canada have experienced bear-market plunges of 20 percent or more since September as credit losses surged and record commodity prices stoked inflation.

Confidence Report

Europeans' confidence in the outlook for the economy dropped the most since the Sept. 11, 2001, terrorist attacks. An index measuring sentiment in the euro area fell to 89.5 in July, more than economists forecast, the European Commission in Brussels said. A separate report showed retail sales declined.


Siemens advanced 5.5 percent to 77.24 euros as net income through June 30 was 1.37 billion euros ($2.1 billion), topping the 967 million-euro profit predicted by analysts.

ArcelorMittal helped fuel a rally in raw-materials producers after second-quarter profit exceeded analysts' estimates and the steelmaker predicted profit will grow in the third quarter in Asia, Africa and the former Soviet Union. The shares added 8.4 percent to 57.80 euros.

ThyssenKrupp gained 7.5 percent to 35.89 euros. Merrill Lynch lifted its recommendation on the shares to ``buy'' from ``neutral,'' saying Germany's largest steelmaker may raise its full-year earnings forecast.

`Massive Relief'

Matsushita, which makes Panasonic-brand electronics, rose 5.5 percent to 2,300 yen. First-quarter profit surged 86 percent on sales of flat-screen televisions and digital cameras. HSBC Holdings Plc and Nomura Holdings Inc. upgraded the stock.

Ryanair, Europe's biggest discount airline, climbed 3.1 percent to 2.68 euros. British Airways Plc, the region's third- largest carrier, added 4.4 percent to 259.5 pence. Singapore Air, which yesterday forecast narrower operating profit margins due to higher fuel costs, gained 2.9 percent to S$15.82.

Crude was little changed at $122.20 a barrel in New York on speculation gasoline demand in Asia and the U.S. may slow. Prices have dropped more than $25 a barrel, or 17 percent, from their July 11 record.

``If the oil price keeps coming off maybe we can squeeze a bit higher,'' James Barty, head of macro strategy at Arrowgrass Capital Partners, said in a Bloomberg Television interview in London. ``It's a massive relief on a number of fronts.''

China Petroleum & Chemical Corp., the country's biggest refiner, jumped 4.9 percent to HK$8.29 as investors speculated lower crude prices will help boost profit margins from refining. PetroChina Co., the second-largest, rose 2.4 percent to HK$10.30.

Financial Shares

Postbank helped push financial shares higher after Germany's largest consumer bank by clients posted second-quarter revenue from lending that exceeded analysts' estimates. Postbank shares added 3.3 percent to 46.57 euros.

Dexia SA, the world's largest lender to local governments, advanced 4.4 percent to 8.76 euros. Barclays Plc, the U.K.'s third-biggest bank, increased 1.4 percent to 329.25 pence.

LVMH Moet Hennessy Louis Vuitton SA gained 4.5 percent to 71.07 euros after first-half net income at the world's largest luxury-goods maker climbed 7 percent to 891 million euros. That surpassed the 857 million-euro median estimate of nine analysts surveyed by Bloomberg.

Freddie Mac rose 5.6 percent to $8.89 and Fannie Mae added 5 percent to $12.18. The U.S. Securities and Exchange Commission extended an emergency limit on short sales in shares of the mortgage-finance companies and 17 brokerages as it prepares broader rules to thwart stock manipulation.

ADP Jobs Report

Separately, President George W. Bush signed into law legislation that helps 400,000 homeowners facing foreclosure and extends a lifeline to Fannie Mae and Freddie Mac.

Companies in the U.S. added 9,000 jobs in July following a revised drop of 77,000 for the prior month that was smaller than previously estimated, ADP Employer Services said.

Lloyds TSB Group Plc dropped 6.9 percent to 299 pence. The largest bank that depends almost entirely on U.K. lending raised its dividend by 2 percent, less than last year's 5 percent, and said first-half profit fell 63 percent after bad loans and credit writedowns rose.

European Aeronautic, Defence & Space Co. retreated 4.5 percent to 12.10 euros. The world's biggest maker of airliners reported second-quarter earnings that trailed analysts' estimates because of delays to the superjumbo Airbus SAS A380 and the dollar's decline.

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.