European Stocks Rise, Led by Total, BHP; U.S. Futures Advance

By Adam Haigh

Aug. 18 (Bloomberg) -- European stocks rose for a third day as the cheapest energy shares in a decade lured investors and higher metals prices lifted mining companies. U.S. index futures also gained, while China's shares plunged to an 18-month low.

Total SA and Royal Dutch Shell Plc led the Dow Jones Stoxx 600 Oil & Gas Index to a 1.8 percent gain, the most in six weeks. Anglo American Plc rallied 3.4 percent, following gold and silver higher. BHP Billiton Ltd., the world's largest mining company, rose 2.2 percent after reporting record earnings and raising its dividend. Michael Page International Plc surged 12 percent as Adecco SA indicated it is considering a bid for the recruitment firm.

``Long-term demand is very strong'' for commodities, Mark Tinker, fund manger at Axa Framlington Ltd. in London with about $13.5 billion, said in a Bloomberg Television interview. There's been a ``massive rotation into these stocks,'' he said.

Europe's Stoxx 600 added 0.5 percent to 288.58 at 1:47 p.m. in London. The gauge for energy shares, the best performer today among the 18 industries in the broader index, traded at 7.61 times earnings at the end of last week, the lowest since at least December 1998, based on data compiled by Bloomberg News.

Futures on the Standard & Poor's 500 Index rose 0.3 percent. China's CSI 300 Index tumbled 5.5 percent on concern the government will avoid introducing measures to boost the world's worst-performing market this year.

Pakistan's benchmark Karachi 100 index advanced 4.5 percent, the biggest jump since June 24, after President Pervez Musharraf resigned to avoid facing impeachment charges.

National Markets

National benchmark indexes increased in 13 of the 18 western European markets. France's CAC 40 climbed 1 percent, and Germany's DAX gained 0.4 percent. The U.K.'s FTSE 100 rallied 0.6 percent.

Total, Europe's third-largest oil company, added 2.8 percent to 48.90 euros, while Shell, the region's biggest, climbed 2.1 percent to 1,835 pence.

Anglo American, the world's fourth-largest diversified mining company, jumped 3.2 percent to 2,824 pence. Rio Tinto Group, the world's third-biggest mining company, added 2.1 percent to 4,701 pence.

Gold advanced as much as 2.6 percent as the dollar declined against the euro, bolstering demand for the metal as an alternative investment. Silver gained 1.3 percent.

BHP Billiton added 2.2 percent to 1,563 pence. Profit rose 30 percent in the second half after the company boosted production of crude oil and metals to benefit from rising prices driven by demand from China. BHP raised its full-year dividend 49 percent to 70 cents a share.

Michael Page

Michael Page soared 12 percent to 357 pence. Chief Executive Officer Steve Ingham said he may accept a bid if it was ``sensible.'' The company has rejected a 1.3 billion-pound ($2.4 billion) bid from Adecco.

Woolworths Group Plc, whose U.K. stores sell goods from appliances to candy, jumped 12 percent to 7.44 pence after saying it rejected a takeover offer from Iceland Foods Ltd. because the bid was too low and would have saddled Woolworths with pension liabilities.

The Stoxx 600 has fallen 21 percent this year as losses at financial firms exceeded $500 billion, inflation accelerated and oil climbed to a record. Crude's more than 20 percent retreat from a record in July has helped the index claw back 7.2 percent from a three-year low reached on July 15.

JPMorgan Chase & Co.'s $1.5 billion loss on mortgage-backed assets last week sent European stocks to their biggest weekly drop in a month.

Adidas AG, the world's second-largest sporting-goods maker, declined 2.2 percent to 41.16 euros after HSBC Holdings Plc recommended downgraded the shares to ``underweight'' from ``neutral,'' saying that the long-term consensus estimates for earnings over the next three years are ``too optimistic.''

Home Retail Group Plc slipped 3.2 percent to 247.5 pence in London after a report showed U.K. house prices slumped the most this month in at least five years. J Sainsbury Plc, Britain's third-largest, dropped 2.7 percent to 335.5 pence.

U.K. house prices posted the biggest annual decline in August since at least 2002 as reduced mortgage lending deepened the property slump in London, according to Rightmove Plc, the owner of Britain's most-used property Web site.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net