European Stocks Advance; Sanofi-Aventis, Unilever Increase

By Adria Cimino

Dec. 18 (Bloomberg) -- European stocks gained as speculation President-elect Barack Obama will seek approval for an $850 billion stimulus plan overshadowed lower forecasts from ASML Holding NV and Carrefour SA.

Sanofi-Aventis SA and Unilever, which make at least 30 percent of their sales in the Americas, advanced more than 1.5 percent. ASML sank 5.2 percent after reducing its sales outlook and Carrefour slid 7.2 percent as the retailer cut its profit and revenue projections for a second time this year.

Europe’s Dow Jones Stoxx 600 Index added 0.3 percent to 198.05 at 9:18 a.m. in London. The MSCI Asia Pacific Index increased 0.8 percent. Futures on the Standard & Poor’s 500 Index expiring in March rose 0.2 percent.

Obama’s plan “is an opportunity to boost the economy,” said Vincent Juvyns, a strategist at ING Investment Management in Brussels, which oversees about $537 billion. “Authorities in the U.S. are doing the maximum to help the economy. This comforts us in our investment strategy.”

The Stoxx 600 has added 8.8 percent since Nov. 21 as governments from the U.K. to China and the U.S. took steps to protect their economies from the worst financial crisis since the Great Depression.

The index is still headed for a record 46 percent annual drop as credit losses and writedowns at the world’s largest banks surpassed $1 trillion and Europe, the U.S. and Japan entered the first simultaneous recessions since World War II.

Obama Plans

Obama may ask Congress next year to approve a stimulus plan of around $850 billion, an amount that has grown as the U.S. economy sinks deeper into recession, an adviser to the president- elect said. Obama’s transition team believes that the amount is necessary to reverse rising unemployment, said the adviser, who spoke on condition of anonymity.

Treasury Secretary Henry Paulson may ask Congress for the second half of the $700 billion bank rescue program, concerned that the deepening recession may spark further financial turmoil.

The S&P 500 retreated from a five-week high yesterday in the U.S. on concern the Federal Reserve has few tools left to combat the recession after reducing its benchmark interest rate to a record low.

“The economy hasn’t stopped showing signs of contraction,” Benoit de Broissia, who helps manage about $5.8 billion at KBL Richelieu in Paris, said in a Bloomberg Television interview. “Stocks will remain volatile. The market remains febrile.”

ECB Meeting

The European Central Bank may cut its deposit rate as soon as today in an effort to jolt banks into lending more to each other, economists said.

President Jean-Claude Trichet and his governing council meet in Frankfurt after signaling this month they may soon lower the 2 percent rate they pay on cash stashed overnight at the bank by financial companies. They want to encourage banks to lend more and free up capital for consumers and companies.

Sanofi gained 2.2 percent to 46.61 euros. France’s largest drugmaker made almost 34 percent of sales in the U.S. last year, according to Bloomberg data.

Unilever climbed 1.8 percent to 1,532 pence. The world’s second-biggest consumer-products company gets about a third of its revenue in the Americas.

ASML tumbled 5.2 percent to 11.35 euros. Europe’s largest maker of semiconductor equipment reduced its sales forecast and said it will slash about 1,000 jobs, or more than 10 percent of the total, as orders decline.

Carrefour

Carrefour sank 7.2 percent to 27.18 euros. Merrill Lynch & Co. lowered its rating to “underperform” and Deutsche Bank cut its recommendation to “hold” from “buy” after the retailer reduced its sales and profit forecasts.

British Airways Plc slipped 3.8 percent to 165.5 pence. Europe’s third-largest airline ended merger talks with Qantas Airways Ltd. after failing to reach an agreement on “key terms.” A combination of the two carriers would have created a company with about $23 billion in annual sales and a fleet of almost 500 planes.

Arriva Plc jumped 4.6 percent to 572 pence after the operator of the U.K.’s longest train route said group revenue will increase about 50 percent for the full year and there will be “significant” earnings growth.

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