Most European Stocks Rise as Inflation Concern Eases; RBS Gains

By Michael Patterson

Aug. 15 (Bloomberg) -- Most European stocks rose, led by retailers and airlines, as falling commodity prices eased concern that inflation will force central banks to lift interest rates.

Carrefour SA, Ryanair Holdings Plc and Royal Bank of Scotland Group Plc climbed after prices for oil, gold and copper declined. European Aeronautic Defence & Space Co. rallied 5.8 percent as the euro slipped to the lowest since February against the dollar, boosting the value of its overseas sales. The gains were limited as mining companies and oil producers including BHP Billiton Ltd., Rio Tinto Group and BP Plc dropped.

The retreat in commodities ``is good for consumer-related sectors,'' said Matthias Fankhauser, a Zurich-based fund manager at Clariden Leu, which oversees about $120 billion. ``It helps the outlook for inflation. It's also going to help if we have a higher dollar.''

Europe's Dow Jones Stoxx 600 Index was little changed, adding less than 0.1 percent to 285.93 at 3:07 p.m. in London, leaving the gauge down 1.1 percent for the week. More than six stocks advanced for every five that fell today.

The Stoxx 600 lost 21 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.

Stocks trimmed gains after a report showed confidence among U.S. consumers rose less than forecast in August. The Reuters/University of Michigan preliminary index of consumer sentiment increased to 61.7 from 61.2 in July. Economists had forecast a reading of 62, according to a Bloomberg survey.

National Markets

National benchmark indexes climbed in all 14 western European markets that were open except the U.K., where commodity producers led declines. France's CAC 40 added 0.8 percent and Germany's DAX increased 0.1 percent. The U.K.'s FTSE 100 lost 0.5 percent.

Hennes & Mauritz AB jumped after Europe's second-largest clothes retailer reported same-store sales increased more than analysts estimated. Stada Arzneimittel AG rallied 11 percent on a report Teva Pharmaceutical Industries Ltd. is in talks to buy the drugmaker, while Vestas Wind Systems A/S, the world's biggest wind-turbine maker, climbed on higher profit.

The Stoxx 600 earlier rebounded from a brief decline of as much as 0.1 percent after a report showed manufacturing in New York unexpectedly grew in August as the cost of raw materials cooled, making companies more optimistic about the future. The Federal Reserve Bank of New York's general economic index rose to 2.8, the highest level since January, from minus 4.9 a month earlier, the bank said today. A reading of zero is the dividing line between growth and contraction.

Carrefour

Carrefour, Europe's biggest retailer, added 2.2 percent to 36.49 euros. Ryanair, the region's largest discount airline, increased 4.9 percent to 2.76 euros. Royal Bank, the U.K.'s second-largest lender, climbed 1 percent to 232.5 pence.

Crude oil fell 1.8 percent, gold dropped 2.3 percent, silver plunged 7.8 percent and corn dropped 3.4 percent as a rising U.S. currency diminished the appeal of commodities as alternative investments.

Oil has tumbled 23 percent from a record $147.27 a barrel on July 11, helping to send the Reuters/Jefferies CRB Commodity Index to its biggest monthly decline since 1980 in July.

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.''

Rio Tinto

Rio Tinto, the world's third-biggest mining company, dropped 2.4 percent to 4,683 pence. BHP Billiton, the largest, fell 3.3 percent to 1,530 pence. Both stocks have declined more than 25 percent during the past three months in London trading as copper and gold prices tumbled.

BP, Europe's second biggest oil company, fell 1.5 percent to 519.25 pence.

More than $12 trillion has been erased from global equity markets this year as all of the 23 developed nations in the MSCI World Index except for Canada experienced bear-market plunges of 20 percent or more since September.

EADS, which controls planemaker Airbus SAS, gained 5.8 percent to 15.72 euros as the euro dropped to the lowest since Feb. 20 against the dollar.

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

H&M rallied 2.2 percent to 320.5 kronor. 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.

Stada Arzneimittel

Stada Arzneimittel climbed 11 percent to 35.70 euros after Israel's Globes newspaper said Teva is in talks to acquire Germany's third-largest maker of generic drugs. Stada spokesman Axel Mueller wasn't immediately available for comment. Teva spokeswoman Ayala Miller didn't immediately return a telephone call requesting comment.

Vestas Wind added 5.5 percent to 618 kroner. Second-quarter profit rose 27 percent as surging demand for alternative energy sources raised prices.

Michael Page International Plc slumped 6.2 percent to 314.25 pence. 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.