Stocks in Europe, Asia Advance; U.S. Index Futures Decline

By Adria Cimino

Aug. 6 (Bloomberg) -- Stocks rose in Europe and Asia after BNP Paribas SA's earnings beat analysts' estimates, Xstrata Plc made a hostile bid for Lonmin Plc and the Federal Reserve indicated interest rates are on hold. U.S. index futures fell.

BNP jumped the most in three weeks after pretax profit at its investment bank eased concern France's biggest bank will have to raise capital. Lonmin surged 47 percent as Xstrata offered $9.8 billion for the platinum producer. Cisco Systems Inc. jumped in Germany after its forecast reassured investors. Air France-KLM Group gained in Paris and Toyota Motor Corp. climbed in Tokyo as oil traded near a three-month low.

``Earnings are far from disappointing,'' said Salah Seddik, a fund manager at Richelieu Finance in Paris, which oversees $6.2 billion. ``We have a status quo from the Fed, oil has fallen below the $120 barrier and banks' earnings are pushing the risk of a systemic crisis farther away.''

The MSCI World Index added 0.3 percent to 1,365.39 at 1:31 p.m. in London. The index trimmed its 2008 decline to 14 percent as Fed policy makers left the benchmark rate at 2 percent and signaled they won't lift borrowing costs until the credit crisis and inflation ease.

Stocks pared gains and U.S. futures fell after Freddie Mac, the second-largest U.S. mortgage-finance company, posted its fourth straight quarterly loss and said it will cut the common- stock dividend.

Bear Markets

All 23 countries in the MSCI World except Canada have entered bear markets since September after oil rose to a record in July and credit losses topped $490 billion worldwide, prompting analysts to cut earnings estimates.

Mining stocks had the biggest gains today among the 10 industries in the MSCI World as Anglo American Plc and Vedanta Resources Plc also rose. The MSCI World/Materials Index, the worst performer in the past month after the gauge for oil shares, climbed 1.5 percent today, snapping a four-day decline.

Futures on the Standard & Poor's 500 Index fell 0.3 percent. Europe's Dow Jones Stoxx 600 Index rose 0.2 percent as Freddie Mac's results sent financial firms lower. Nokian Renkaat Oyj tumbled after the tiremaker's earnings missed estimates.

The MSCI Asia Pacific Index increased 1.9 percent, with Commonwealth Bank of Australia and Sony Corp. increasing.

BNP Paribas climbed 5.3 percent to 65.15 euros. Pretax earnings at its securities division, the only one among the largest French banks to remain profitable in each quarter since the start of last year, fell to 523 million euros ($809 million) from 1.22 billion euros a year earlier.

Fewer Writedowns

``Earnings from French banks are better than expected,'' said Alexis Charveriat, a fund manager at Ecofi Investissements, a unit of GIE USCC in Paris, which oversees $14 billion. ``The market is reassured.''

Profit surpassed the 285 million-euro estimate of analysts surveyed by Bloomberg. The unit had 457 million euros of writedowns, less than the 475 million euros projected by analysts.

``We won't see a capital increase,'' said Richelieu's Seddik. ``Writedowns are less than expected. The bank isn't exposed to the most toxic products linked to subprime.''

Profits at Stoxx 600 companies may drop 2.5 percent on average in 2008, according to projections tracked by Bloomberg. That's down from a forecast for 11 percent growth in January.

Commonwealth Bank of Australia, the nation's biggest mortgage lender, advanced 6.3 percent to A$43.85. Westpac Banking Corp., the country's third-largest bank by market value, added 5.3 percent to A$22.99.

Rates Unchanged

Australia's central bank left its benchmark interest rate unchanged at 7.25 percent and Governor Glenn Stevens said inflation may slow, allowing for a ``less restrictive stance'' on rates.

Lonmin, the world's third-largest platinum producer, surged 1,089 pence to 3,408 after Xstrata made an unsolicited 5 billion-pound ($9.8 billion) bid to add mines in South Africa and diversify its metals output.

Xstrata will offer 3,300 pence in cash for each Lonmin share.

Anglo American, the world's fourth-biggest diversified mining company, gained 2.9 percent to 2,772 pence. Vedanta, controlled by India billionaire Anil Agarwal, jumped 4.1 percent to 1,847 pence.

Air France, Europe's biggest airline, added 2.2 percent to 18.17 euros. Toyota, Japan's largest automaker, added 3.1 percent to 4,640 yen.

Crude for September delivery was little changed, after falling as much as 0.9 percent, in electronic trading on the New York Mercantile Exchange. It last traded up 15 cents to $119.32.

Fuel Costs

Oil has lost more than $28 since touching a record $147.27 in New York on July 11 as unprecedented fuel costs curbed consumer spending.

``The price of oil keeps falling and equity prices are continuing to rally,'' Paul Webb, chief dealer at CMC Markets in London, wrote.

Cisco, the world's largest maker of network equipment, climbed 5 percent to $23.86 in Germany. Chief Executive Officer John Chambers's forecast for the next six months eased investor concern that business is deteriorating.

Fourth-quarter profit beat analysts' estimates by a penny, revenue surpassed $10 billion for the first time, and sales this quarter and next will be in line with projections.

Freddie Mac lost 13 percent to $7 in pre-market trading. The finance company hobbled by record foreclosures will slash its dividend at least 80 percent.

The second-quarter net loss of $1.63 a share, compares with the 54-cent a share average estimate of nine analysts in a Bloomberg survey.

Earnings Outlook

S&P 500 companies are poised for a fourth straight quarter of shrinking profits, the longest stretch of declines since 2002. Earnings at the 385 companies that released results so far were down 18 percent from the year-earlier quarter, according to data compiled by Bloomberg.

Sony rose 5.7 percent to 4,290 yen after saying it will buy Bertelsmann's 50 percent stake in Sony BMG Music Entertainment for $900 million to gain full control of the record company, whose artists include Britney Spears and Justin Timberlake.

Nokian Renkaat sank 10 percent to 25.73 euros. The Nordic region's biggest tiremaker said second-quarter profit rose a less-than-expected 29 percent as increases in raw-material costs held back growth propelled by Russia's growing car market.

Carlsberg A/S added 3.2 percent to 453.5 kroner. The Nordic region's largest brewer had its recommendation lifted to ``buy'' from ``hold'' at ING Groep NV on the outlook for earnings.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.