European Stocks Advance, U.S. Index Futures Rise; H&M Gains

By Michael Patterson

Aug. 15 (Bloomberg) -- European stocks rose, trimming this week's decline, as the retreat in commodity prices eased concern inflation will force central banks to lift interest rates as the economy slows. U.S. index futures also gained, while Asian shares slumped.

Royal Bank of Scotland Group Plc and BNP Paribas SA gained after prices for oil, gold, copper and corn fell. European Aeronautic Defence & Space Co. advanced as the euro dropped to the lowest since February against the dollar, boosting the value of its overseas sales. Hennes & Mauritz AB jumped after Europe's second-largest clothes retailer reported same-store sales increased more than analysts estimated.

Europe's Dow Jones Stoxx 600 Index advanced 0.4 percent to 286.98 at 8:05 a.m. in London, reducing this week's drop to 0.8 percent. Futures on the Standard & Poor's 500 Index rose 0.2 percent, while the MSCI Asia Pacific Index fell 0.4 percent.

The drop in oil is ``a relief for equities,'' Christian Gattiker, Zurich-based head of equity research at Bank Julius Baer & Co., said in a Bloomberg Television interview. Commodities are ``much lower than the highs, so we will see some easing in the pressure there.''

The Stoxx 600 lost 22 percent in 2008 after surging commodity prices spurred speculation the European Central Bank would increase its benchmark interest rate for a second time this year even as $500 billion of credit-market losses threaten to prolong the economy's slump.

Royal Bank, BNP

Royal Bank, the U.K.'s second-largest lender, climbed 2 percent to 234.75 pence. BNP, France's biggest bank, gained 1.2 percent to 61.21 euros.

Crude oil fell 1.4 percent, gold dropped 2.2 percent, silver plunged 12 percent, copper lost 1.3 percent and corn dropped 2.6 percent as a rising U.S. currency diminished the appeal of commodities as alternative investments.

Rio Tinto Group, the world's third-biggest mining company, dropped 1 percent to 4,750 pence. BHP Billiton Ltd., the largest, fell 1.4 percent to 1,560 pence. Both stocks have declined more than 25 percent during the past three months in London trading as copper and gold prices tumbled.

EADS, which controls planemaker Airbus SAS, gained 2.4 percent to 15.21 euros as the euro dropped to the lowest since Feb. 21 against the dollar.

The dollar is headed for a fifth weekly gain against the euro, its longest winning streak in more than two years.

H&M rallied 2.1 percent to 320 kronor after same-store sales rose 3 percent in July after consumers bought low-priced summer garments including cardigans and polo shirts. That beat the 2.1 percent average estimate of analysts surveyed by SME Direkt.

Michael Page International Plc dropped 5.3 percent to 317.25 pence after the U.K.'s second-largest recruitment company said it rejected a proposed takeover bid from Adecco SA because it ``materially undervalued the company and its prospects.''

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