Most European Stocks Advance; U.S. Futures Are Little Changed

By Adam Haigh

Nov. 4 (Bloomberg) -- Most European stocks rose and Asian shares gained after results from Clariant AG and Marks & Spencer Group Plc eased concern the economic slowdown is snuffing out profit growth, while money-market rates declined. U.S. index futures were little changed.

Clariant and Marks & Spencer rallied more than 5 percent after the companies reported earnings that topped analysts' estimates. Bayerische Motoren Werke AG led carmakers lower, dropping 4.3 percent, after abandoning its profit forecast.

Europe's Dow Jones Stoxx 600 Index slipped less than 0.1 percent to 223.24 at 8:10 a.m. in London as three stocks rose for every two that fell. The regional benchmark gained for five straight days as of yesterday, the longest winning streak in a year.

``You have seen some companies that have surprised the market with better-than expected results,'' said David Buik, a market analyst at BGC Partners in London.

Shares in Asia rose, led by financial companies, as lending costs tumbled the most in almost a decade in Japan and Australia's central bank cut interest rates. Japan's Nikkei 225 Stock Average gained 4.6 percent to 8,974.04, as trading resumed after yesterday's holiday.

Futures on the Standard & Poor's 500 Index slipped less than 0.1 percent as voters in the U.S. go to the polls today to elect a new president. The winner between Democrat Barack Obama, who leads in national polls, and Republican John McCain must contend with an economy crippled by declining corporate profits and the highest unemployment in five years.

Profit Scorecard

Earnings for the 812 companies in western Europe that reported results since Oct. 7 declined 4.2 percent on average, trailing analysts' expectations by 3.1 percent, according to data compiled by Bloomberg. Companies from Nokia Oyj, the world's biggest maker of mobile phones, to BASF SE, the largest chemicals supplier, have reported earnings that missed analyst estimates.

Profit for companies in the Stoxx 600 will decline 6.8 percent in 2008, according to estimates compiled by Bloomberg. That's down from 11 percent growth predicted the start of the year, the data show.

Clariant, the world's biggest maker of chemicals used in printing ink, jumped 12 percent to 8.2 francs after reporting a third-quarter profit of 75 million Swiss francs ($64 million) as it closed factories and raised prices to pass on higher raw- material costs.

Marks & Spencer climbed 5.6 percent to 234 pence. The U.K.'s largest clothes retailer reported net income of 223.2 million pounds ($350 million), beating the 211 million-pound median estimate of six analysts surveyed by Bloomberg News.

Biggest Rally

The Stoxx 600 yesterday extended its 12 percent rally from last week, the biggest weekly gain since September 2001, as central banks from the U.S. to Japan cut borrowing costs to revive economic growth. Still, European stocks are headed for their worst year on record as a jump in U.S. mortgage defaults saddled global banks with more than $684 billion of losses and caused credit markets to lock up.

Money-market rates extended declines in Asia, further evidence the paralysis in the credit markets is easing.

Hong Kong's three-month interbank offered rate, or Hibor, dropped 29 basis points to a seven-week low of 2.79 percent. The rate for U.S. dollar loans in Singapore, or Sibor, fell to 2.80 percent, the lowest since July 2. Tokyo's rate, known as Tibor, slid 9.8 basis points to 0.791 percent, the biggest drop since December 1999. Japan's markets were shut yesterday for a holiday.

UBS AG, the European bank with the biggest losses from the global credit crisis, may fall after saying ``difficult'' market conditions will continue to drag on fees the company earns from managing money.

`Many Difficult Conditions'

UBS said net income totaled 296 million francs for the quarter, matching the figure published Oct. 16. In the fourth quarter, a reversal of gains on its own debt could hurt results, the Zurich-based bank said today.

``Since the beginning of the fourth quarter, we have seen many difficult conditions across equity, credit and money markets worldwide,'' the bank said in its quarterly report.

Suez Environnement SA fell 2.8 percent to 15.50 euros after Goldman Sachs Group Inc. recommended selling shares in the company, citing the economic weakness. Goldman cut its recommendation on shares of Europe's second-biggest water company to ``sell'' from ``neutral.''

``Further signs of economic weakness and the impact this has on waste volumes could undermine Suez Environnement's share price relative to the sector,'' Andrew Mead, a London-based Goldman analyst, wrote in a note to clients.

ABB, Swiss Re

ABB Ltd., the world's largest builder of electricity grids, fell 2.8 percent to 14.88 francs after Morgan Stanley downgraded the stock to ``underweight'' from ``equal-weight.''

``Weakening infrastructure investment should show the cyclicality of the ABB portfolio,'' Scott Babka, a London-based analyst at Morgan Stanley, wrote in a note to clients today.

Daimler AG slipped 2.1 percent to 26.25 euros after U.S. auto sales plummeted 32 percent in October to the lowest monthly total since January 1991. Daimler lost as much as 2.5 percent to 26.16 euros in pre-market trading at Lang & Schwarz AG in Frankfurt.

Swiss Reinsurance Co. slumped 7.4 percent to 47 francs after the world's second-biggest reinsurer reported an unexpected loss and suspended a share buyback program.

Swiss Re posted a third-quarter loss because of wrong-way bets on structured products. The net loss was 304 million francs. That missed the median 150 million-franc profit estimate of eight analysts. The company suspended its 7.75 billion franc share buyback program, which was 51.2 percent complete at the end of October.

Royal Bank of Scotland Group Plc, waiting to take up the U.K.'s biggest bailout, fell 4.1 percent to 62.5 francs after saying it will write down $206 million pounds ($323 million) of assets in the third quarter using new accounting rules that are less stringent.

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