European Stocks Advance as Tandberg Rallies; Asian Shares Drop

By Sarah Jones

Oct. 1 (Bloomberg) -- European stocks gained after the International Monetary Fund increased its forecast for global growth and Cisco Systems Inc. agreed to buy Tandberg ASA. Asian shares retreated.

Tandberg, the world’s biggest videoconferencing-equipment maker, jumped 12 percent after agreeing to be bought by Cisco for about $3 billion. Munich Re climbed 2 percent after the world’s biggest reinsurer announced the resumption of its share- buyback program.

Europe’s Dow Jones Stoxx 600 Index added 0.5 percent to 243.74 at 8:20 a.m. in London as the IMF raised its forecast for global growth next year to 3.1 percent from 2.5 percent as more than $2 trillion in stimulus packages and demand in Asia pull the world economy out of its worst recession since World War II.

The Stoxx 600 surged 18 percent in the past three months, the biggest quarterly gain since 1999, as the European Central Bank kept interest rates at a record low and the French and German economies unexpectedly exited recessions. The rebound has sent price-earnings valuations on the index to the highest levels since 2003.

The MSCI Asia Pacific Index fell 1.1 percent today as the Bank of Japan’s Tankan survey showed companies plan to deepen investment cuts. Markets in Hong Kong and China were closed for holidays. Futures on the Standard & Poor’s 500 Index were little changed before reports on U.S. manufacturing and consumer spending that may add to evidence the worst recession since the 1930s is easing.

Greenspan

Former Federal Reserve Chairman Alan Greenspan yesterday said the U.S. will have to both tighten credit and raise taxes as the world’s largest economy recovers.

“The presumption that we’re going to be able to resolve this without significant increases in taxes is unrealistic,” Greenspan said in a Bloomberg Television interview.

The economy will grow at a 3 percent to 4 percent annual pace in the next six months before slowing in 2010, Greenspan predicted. Growth will be aided by a surge in the stock market and inventory restocking by companies. Share prices are likely to “flatten out, even though earnings are doing very well.”

Tandberg rallied 12 percent to 154.5 kroner as Cisco, the world’s largest maker of networking equipment, agreed to buy the Norwegian company for 17.2 billion kroner ($2.96 billion) to expand its video-conferencing products. Cisco will pay 153.50 kroner a share in cash, 11 percent more than Tandberg’s closing price yesterday.

Munich Re Rises

Munich Re advanced 2 percent to 111.18 euros. The reinsurer said it will repurchase shares with a volume of as much as 1 billion euros ($1.5 billion) by the time the company holds its 2010 annual general meeting.

Michelin & Cie. fell 1.4 percent to 52.87 euros. The Wall Street Journal reported that Jean-Dominique Senard, chief financial officer of the world’s second-largest tiremaker, said the economic recovery is shaky and may soon fade. The newspaper cited an interview.

France Telecom SA declined 1.1 percent to 18 euros after Citigroup Inc. lowered its recommendation to “sell” from “hold,” saying the company may suffer from fibre-communication regulation and a new mobile-phone operator in its home market.

Reports today may show U.S. manufacturing expanded last month at the fastest pace in more than three years and consumer spending in August grew the most since 2003. The Institute for Supply Management’s factory gauge rose to 54 in September from 52.9 the month before, according to a Bloomberg News survey of economists. Fifty is the dividing line between expansion and contraction.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.