By Adam Haigh and Alexander Ragir
Nov. 27 (Bloomberg) -- European stocks rose, sending the Dow Jones Stoxx 600 Index to its fourth straight gain, as investors speculated government efforts to shore up banks and the economy will support profits. Shares in Asia and Canada also advanced, while Brazil’s benchmark dropped.
Barclays Plc and Siemens AG rallied more than 4 percent. President-elect Barack Obama yesterday picked former Federal Reserve Chairman Paul Volcker to head an economic advisory board and said he will implement a plan to bolster growth on “day one.” Air Berlin Plc climbed 14 percent after posting a better- than-estimated 43 percent jump in third-quarter profit.
The Stoxx 600 added 2.4 percent to 203.62, extending this week’s advance to 12 percent. The index is still down 44 percent in 2008, headed for its worst year since records began in 1987, as economies from Germany and the U.K. to the U.S. slip into recession.
“Investors see the market as discounting a truly cataclysmic event,” said Chirin Gill, a London-based fund manager at Daiwa SB Investments, which has about $60 billion. “They are gaining reassurance from governments and central banks who are beginning to understand the severity of the situation.”
Trading may be slower than normal today with U.S. markets closed for the Thanksgiving holiday.
The MSCI Asia Pacific Index rose 1.7 percent, with China Vanke Co., the country’s biggest builder, and Aluminum Corp. of China climbing more than 3 percent.
Mumbai Attacks
India halted trading of stocks, bonds and the rupee for the first time in more than three years after terrorist attacks killed 101 people in Mumbai’s financial hub. Stock-index futures and rupee forwards fell, while credit-default swaps rose.
Futures on the Standard & Poor’s 500 Index rose 0.2 percent today after the measure soared 18 percent in the previous four days. Canada’s S&P/TSX Composite Index gained 1.3 percent as Goldcorp Inc. paced gains among raw-material companies. Brazil’s Bovespa Index retreated 0.7 percent on concern a slowing economy and slumping commodity prices may make it difficult for the nation’s biggest raw-material producers to raise capital.
Stocks rallied worldwide this week after China cut borrowing costs by the most in 11 years and the Federal Reserve’s pledge to buy $600 billion of debt sent mortgage rates down by the most in at least seven years.
Citigroup Inc. has jumped 87 percent since the U.S. government injected $20 billion of capital into the bank at the start of the week and guaranteed $306 billion of its mortgages and other troubled loans.
‘Reached a Bottom’
More than $30 trillion has been wiped off the value of global equities this year as credit losses and writedowns approached $1 trillion in the worst financial crisis since the Great Depression.
“We have reached a bottom,” said Jacques Porta, who helps manage $180 million at Ofivalmo Patrimoine in Paris and has been buying shares of Hewlett-Packard Co. and Alstom SA. “There is a slight change of feeling in the newsflow we are getting, relative to what we saw in October. The problems are far from over, but the newsflow is more constructive.”
Barclays gained 4.3 percent to 166,9 pence. Siemens, Europe’s largest engineering company, rose 4.4 percent to 49.12 euros. Daimler AG, the world’s second-biggest luxury-car maker, advanced 3.5 percent to 25.75 euros.
Analysts have slashed earnings estimates this year as the credit turmoil spread. Profit for companies in the Stoxx 600 will slide 12 percent on average in 2008, compared with 11 percent growth forecast at the start of the year, Bloomberg data show.
‘Not That Brave’
“We are not that brave yet” to buy stocks, said Alan Beaney, who manages about $2 billion as head of investments at Principal Investment Management in Leeds, England. “Analysts’ expectations for profit forecasts are too high. We need to see these earnings numbers come down,” he told Bloomberg Television.
Earnings for the 324 companies in the Stoxx 600 that have reported results since Oct. 7 declined 15 percent on average, trailing expectations by 6.4 percent, Bloomberg data show.
Air Berlin surged 14 percent to 3.45 euros. Europe’s third- biggest discount airline reported earnings before interest and taxes of 89.1 million euros ($115 million), beating analysts’ expectations of 71.9 million euros.
In Asia, stocks rallied for a third day on speculation China’s rate cut will boost demand for homes and commodities.
China Vanke climbed 3.1 percent to 7.01 yuan. Aluminum Corp., China’s largest producer of the metal, jumped 3.5 percent to HK$3.30. Inpex Corp., Japan’s biggest oil explorer, soared 10 percent to 573,000 yen.
Under Investigation
Petrobras, as Brazil’s state-controlled oil company is known, lost 2.8 percent to 19.95 reais. Energy Minister Edison Lobao told reporters today that the company was forced to borrow from state-owned discount bank Caixa Economica Federal because it faced a “momentary difficulty” paying taxes.
ALL America Latina Logistica SA declined 6.8 percent to 11 reais. TV Globo reported Brazil’s biggest railroad operator and other companies are under investigation by the country’s Federal Police for misappropriation of government-owned rail wagons and locomotives.
In Toronto, Goldcorp, the world’s second-largest gold producer by market value, added 2.6 percent to C$33.60. Bullion traded near a five-week high in London.
Irish Life & Permanent Plc and Allied Irish Banks Plc rallied after the Irish Association of Investment Managers approached the government about investing in the country’s banks to boost Tier 1 capital ratios. The ratio indicates a bank’s ability to cushion bad debts.
Irish Life & Permanent, the nation’s largest mortgage lender, surged 20 percent to 1.64 euros, while Allied Irish Banks, the biggest bank by value, rose 15 percent to 2.77 euros.
Possible Investment
Separately, the Irish Times reported today that U.S. private equity companies Texas Pacific Group and Kohlberg Kravis Roberts have held talks with Bank of Ireland about a possible investment. The bank was already contacted by a consortium that includes J.C. Flowers & Co, the paper said.
ArcelorMittal added 5.7 percent to 19.87 euros. The world’s largest steelmaker said it may cut as many as 9,000 jobs globally after reducing output on falling demand.
Kingfisher Plc dropped 2.4 percent to 116.6 pence after Europe’s biggest home-improvement retailer said consumer confidence has been “shaken” in all its markets and reported a 4 percent decline in third-quarter profit.
To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net. Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
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