Stocks in Europe and Asia Advance; Deutsche Bank, UBS Climb

By Adria Cimino

Feb. 25 (Bloomberg) -- Stocks rose in Europe and Asia after American officials suggested they won’t wipe out shareholders by nationalizing banks. The MSCI World Index pared its advance and U.S. futures declined after Ukraine had its credit rating downgraded two levels by Standard & Poor’s.

Deutsche Bank AG and UBS AG surged more than 6 percent as Federal Reserve Chairman Ben S. Bernanke told lawmakers the government would use supervision instead of shareholder control to guide banks. Deutsche Boerse AG added 5.9 percent after saying costs in 2009 will be lower than it had anticipated.

The MSCI World Index rose for a second day, increasing 0.6 percent to 772.58 at 1:57 p.m. in London. The gauge of 23 developed countries has still lost 16 percent this year as companies from Anglo American Plc to Cie. de Saint-Gobain SA indicated the recession is worsening and U.S. Treasury Secretary Timothy Geithner failed to convince investors that his plan to rescue U.S. banks will work.

“There was some relief that the equity investor won’t be wiped out at any moment” by U.S. bank nationalizations, Christian Gattiker, head of equity research and strategy at Bank Julius Baer & Co., said in a Bloomberg Television interview. The firm oversees about $307.6 billion. “There’s anecdotal evidence that we’re seeing some stabilization” in the markets, he said.

European stock indexes gave up some of their gains after Ukraine had its rating downgraded two levels to CCC+, seven levels below investment grade, by S&P. The cut comes a day after Latvia was downgraded to junk.

Ukraine Risk

Contracts to protect Ukraine’s government bonds against default cost 59.5 percent upfront and 5 percent a year, according to CMA Datavision prices for credit-default swaps in London. That means it costs $5.95 million in advance and $500,000 a year to protect $10 million of bonds for five years. The cost is higher than any other government debt worldwide, Bloomberg data show.

Europe’s Dow Jones Stoxx 600 Index rebounded from a six-year low, gaining 0.9 percent as Henkel AG and Rhodia SA reported profit that beat analysts’ estimates. The MSCI Asia Pacific Index advanced 1.7 percent.

“Earnings reports are reassuring,” Clemence Bounaix, who helps oversee about $5.2 billion as a fund manager at KBL Richelieu Gestion in Paris, said in a Bloomberg Television interview. “We’re not necessarily having bad surprises.”

Futures on the Standard & Poor’s 500 Index slipped 0.5 percent. U.S. stocks rose the most in a month yesterday, halting a six-day decline, as Federal Deposit Insurance Corp. Chairman Sheila Bair’s statement that large banks have enough capital helped lift equities from their lowest valuations in two decades.

Credit Losses

Bernanke also warned against dismantling the franchises of banks yesterday. The remarks eased concern Geithner’s financial plan would push aside private shareholders.

The Stoxx 600 has retreated 52 percent since the start of last year as credit-related losses at financial firms worldwide climbed to $1.1 trillion and Europe, the U.S. and Japan fell into the first simultaneous recessions since World War II.

The U.K. economy contracted the most since 1980 in the fourth quarter as the financial crisis prompted spending by consumers and companies to shrivel, data from the Office for National Statistics showed today.

Deutsche Bank, Germany’s biggest bank, jumped 9.1 percent to 19.80 euros, while BNP Paribas SA, France’s largest, added 7.8 percent to 24.85 euros. UBS climbed 6.9 percent to 10.53 francs.

RBS, Deutsche Boerse

Royal Bank of Scotland Group Plc rose 6.3 percent to 23.5 pence. RBS and Lloyds Banking Group Plc are expected to sign legally binding agreements to increase lending to small businesses and households by at least 20 billion pounds ($29 billion) apiece in exchange for government insurance on 500 billion pounds of loans and investments, the Guardian reported, without saying where it got the information. Lloyds climbed 9.8 percent to 59.2 pence.

Deutsche Boerse gained 5.9 percent to 38.07 euros. Europe’s largest exchange by market value said costs in 2009 will be lower than it had anticipated as the company seeks to sustain growth as trading volume slows. Fourth-quarter net income was 222.4 million euros ($285.5 million), beating the 206.6 million euros forecast of seven analysts surveyed by Bloomberg.

Henkel climbed 6.9 percent to 19.08 euros. The German maker of Persil detergent said fourth-quarter profit unexpectedly rose to 249 million euros on higher sales after an acquisition.

Rhodia surged 8.9 percent to 2.98 euros. France’s largest maker of specialty chemicals reported fourth-quarter earnings before interest, taxes, depreciation and amortization of 141 million euros, beating the 84 million-euro forecast by Morgan Stanley analysts.

Cadbury

Cadbury Plc advanced 2.2 percent to 519.5 pence after the world’s biggest confectionery maker said revenue growth this year will meet the lower end of its forecasts and kept its goal for higher profit margins as chocolate and gum sales defy the recession.

Profits declined 83 percent for the 185 companies in the Stoxx 600 that have released results since Jan. 12, data compiled by Bloomberg show.

Novartis AG slipped 2.9 percent to 45.64 francs. Europe’s fourth-largest drugmaker said first-quarter profit will be curbed by the strength of the dollar and higher costs in its pharmaceuticals division.

Valeo SA rose 3.6 percent to 9.61 euros. France’s sovereign wealth fund acquired an 8.33 percent stake in Valeo, the country’s second-largest car-parts maker, as part of an effort to help the nation’s ailing auto industry, the government said.

Hammerson Plc jumped 7.6 percent to 334.25 pence after the U.K.’s fourth-biggest real estate investment trust was raised to “overweight” from “neutral” at JPMorgan Chase & Co.

Segro, Cepsa

Segro Plc surged 15 percent to 99.75 pence. The U.K.’s largest owner of business parks agreed to pay a one-time fee and to higher interest charges in return for banks loosening the terms of 1.7 billion pounds of loans and borrowing facilities.

Compania Espanola de Petroleos SA, Spain’s second-largest oil company, plunged 27 percent to 37.80 euros as Banco Santander SA said it may sell its holding for as much as 3 billion euros.

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