By Adria Cimino
Sept. 23 (Bloomberg) -- European and Asian stocks rose for a second day amid speculation the Group of 20 nations will maintain measures to support the economy even as signs grow that a recovery is accelerating.
Alcatel-Lucent SA jumped 3.4 percent after a report that the world’s biggest supplier of fixed-line phone networks may post higher-than-estimated profit. Royal BAM Groep NV, the biggest Dutch builder, gained 4.6 percent after Royal Bank of Scotland Group Plc more than doubled its share-price estimate. Mitchells & Butlers Plc led U.K. pub owners lower after UBS AG recommended selling the shares.
Europe’s Dow Jones Stoxx 600 Index added 0.7 percent to 245.82 at 12:46 p.m. in London. The regional gauge has soared 56 percent since March 9 as earnings at companies from Goldman Sachs Group Inc. to GlaxoSmithKline Plc surpassed projections and the German and French economies exited recessions.
“We’re looking at a recovery,” Mike Lenhoff, who helps oversee about $26 billion as chief strategist at Brewin Dolphin Securities Ltd. in London, said in a Bloomberg Television interview. “Markets are indicating a degree of confidence in prospects of growth that lie ahead. This is the quarter that we’re getting some indication of GDP recovering.”
The MSCI Asia Pacific excluding Japan Index rose 0.3 percent as New Zealand unexpectedly emerged from recession. The country’s economy grew for the first time in six quarters, with gross domestic product increasing 0.1 percent in the three months to June 30, a government report today showed.
U.K. Economy
The U.K.’s recession will end this quarter after five periods of contraction, the Confederation of British Industry said today. The business lobby raised its third-quarter GDP forecast to a 0.3 percent gain from a 0.3 percent drop.
Europe’s manufacturing and service industries expanded for a second month in September, suggesting the euro-region economy is gathering strength. A composite index of both industries in the 16-nation economy rose to 50.8 from 50.4 in August, according to Markit Economics.
Standard & Poor’s 500 Index futures added 0.3 percent, suggesting the benchmark gauge for U.S. equities will extend an 11-month high.
The G-20 leaders will meet in Pittsburgh for two days starting tomorrow to work on an accord to prevent a repeat of the worst financial crisis since the Great Depression and ensure a sustained recovery. International Monetary Fund Managing Director Dominique Strauss-Kahn in an interview called on leaders from the G-20 to maintain efforts to pull the world economy out of its first recession since World War II, warning the crisis isn’t over.
$12 Trillion
Equities have surged since March as the G-20 committed about $12 trillion to revive growth and the Federal Reserve kept overnight borrowing costs near zero to unlock credit markets. The advance has pushed the valuation of Europe’s Stoxx 600 to 51 times reported profit, the most expensive level since 2003, according to data compiled by Bloomberg.
Fed officials may signal today that the U.S. economy has started to recover while maintaining their pledge to keep the benchmark interest rate near a record low for an “extended period.” Officials will probably debate their purchases of $1.45 trillion in housing debt, including whether to extend the emergency program into 2010, analysts said.
The Federal Open Market Committee is scheduled to issue its statement at around 2:15 p.m. Washington time after the end of its two-day meeting.
‘Easily Go Higher’
Inflation caused by the Fed’s efforts to prop up the U.S. economy will cause stocks to outperform cash and bond investments, Marc Faber, publisher of the Gloom, Boom & Doom report, said yesterday in an interview with Bloomberg Television.
“Stocks can easily go higher. If you print the money, they can go anywhere,” Faber said, adding that money pumped into the economy by central bankers will push the S&P 500 as high as 1,250 in a year.
All nine members of the Bank of England’s Monetary Policy Committee voted to maintain a 175 billion-pound ($286 billion) program of asset purchases this month, minutes of the Sept. 10 decision released by the central bank today in London showed. The BOE also unanimously opted to keep its key interest rate at 0.5 percent.
Alcatel-Lucent climbed 3.4 percent to 3.11 euros. The company indicated to analysts that it may report higher-than- estimated operating profit for the third quarter, according to Wansquare.
BAM Groep jumped 4.6 percent to 8.26 euros after RBS raised the share-price estimate to 11 euros from 5.5 euros.
Pub Operators
U.K. pub operators fell after UBS advised investors to sell the shares. Mitchells & Butlers, Greene King Plc, Marston’s Plc, and Enterprise Inns Plc were downgraded to “sell” at UBS, which said an “optimistic” outlook on the U.K. economy is already “factored into current share prices.”
Mitchells & Butlers, the owner of about 2,000 U.K. pubs, slid 2.8 percent to 290.4 pence. Greene King lost 1.4 percent to 441.8 pence. Enterprise Inns tumbled 6.1 percent to 134.9 pence and Marston’s slipped 1.4 percent to 105 pence.
JCDecaux SA dropped 1.2 percent to 15.69 euros. The world’s second-largest outdoor advertising company had its long- and short-term corporate credit ratings cut one level by S&P, which cited a lack of improvement in trading conditions.
Liberty International Plc, Britain’s largest shopping- center owner, and Yell Group Plc, the publisher of the U.K.’s Yellow Pages phone directory, retreated after announced share offerings.
Share Sales
Liberty slumped 7.9 percent to 519.5 pence. The company said it aims to raise more than 300 million pounds by selling stock for the second time in five months. Yell slid 13 percent to 65 pence after saying it plans to raise at least 500 million pounds to help repay debt.
U.K. homebuilders Barratt Developments Plc and Redrow Plc announced plans to raise a combined 843.5 million pounds by selling shares to pay down debt and buy cheap land. Barratt slipped 0.5 percent to 267.2 pence and Redrow fell 0.5 percent to 232.3 pence.
Strategists at Wall Street’s biggest securities firms can’t keep up with the S&P 500 after the steepest surge since the 1930s. The gauge climbed 0.7 percent yesterday to 1,071.66, leaving it above all but one of the 10 projections by forecasters in a Bloomberg survey this month, the first time that’s happened in data going back to 1999. The average forecast for the S&P 500 from the strategists is 1,022, about 5 percent below the index’s current level.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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