European Stocks Advance, Led by Philips; Asian Shares Decline

By Adria Cimino

Oct. 12 (Bloomberg) -- European stocks advanced, with the Dow Jones Stoxx 600 Index building on its biggest weekly gain since July, as Royal Philips Electronics NV reported an unexpected profit. Asian shares fell.

Philips, Europe’s biggest consumer-electronics maker, rose 6.3 percent after posting third-quarter net income of 174 million euros ($256 million) as sales topped analysts’ estimates. Allied Irish Banks Plc climbed 4.3 percent after Ireland’s Green Party backed a so-called bad bank.

Europe’s Stoxx 600 added 0.9 percent at 9:31 a.m. in London after surging 3.7 percent last week. The gauge has rebounded 55 percent since March 9 as companies from Bayer AG to Alcoa Inc. reported earnings that beat analysts’ estimates and the economic contractions in Germany and France ended.

“Topline growth can support markets and even edge them further,” Kevin Gardiner, head of investment strategy for Europe, the Middle East and Africa at Barclays Wealth in London, said in a Bloomberg Television interview. “As economies move away from the recession, we’re going to see a rise in revenues. The story is growth is going to be restored over the next six months.”

Earnings for companies in the Stoxx 600 may rise 3.7 percent this year and 31 percent in 2010, according to analysts’ estimates compiled by Bloomberg.

The MSCI Asia Pacific excluding Japan Index slipped 0.4 percent, led by South Korean oil refiners on concern they’ll report weaker-than-estimated profits. Japanese markets are closed today for a holiday.

U.S. Futures

Futures on the Standard & Poor’s 500 Index increased 0.6 percent after the benchmark gauge for U.S. equities posted its biggest weekly rally since July last week.

Philips surged 6.3 percent to 18.11 euros in Amsterdam. The company posted a profit in the third quarter as operating earnings at the consumer unit more than doubled. Analysts had predicted a loss of 44.7 million euros, according to 13 estimates compiled by Bloomberg.

Allied Irish Banks rose 4.1 percent to 3.17 euros and Bank of Ireland Plc added 1.8 percent to 3.20 euros. Ireland’s Green Party voted to stay in the nation’s governing coalition, averting a general election as the country’s so-called bad bank prepares to buy property loans to purge lenders of souring assets. Greens supported a government plan to pay 54 billion euros for banks’ property loans.

ITV Gains

ITV Plc, the U.K.’s biggest commercial broadcaster, jumped 5.3 percent to 48.84 pence. The company said it appointed John Cresswell, currently chief operating officer, as interim chief executive officer. Separately, Goldman Sachs Group Inc. lifted its recommendation on the shares to “buy” from “neutral,” citing valuation and saying it continues “to see plausible acquisition interest” from RTL Group SA and Bertelsmann AG.

Carlsberg A/S retreated 2.1 percent to 343.25 kroner. The Danish brewer of Carlsberg, Tuborg and Baltika was downgraded to “neutral” from “overweight” at JPMorgan Chase & Co.

Heineken NV lost 2.5 percent to 29.88 euros. UBS AG cut its recommendation on the Dutch brewer to “neutral” from “buy.”

SK Energy Co. sank 9.9 percent to 113,500 won in Seoul after Woori Investment & Securities Co. said oil refiners may report “earnings shocks.”

There is still room for stocks to rise, according to Barclays Capital Inc.’s Larry Kantor, while David Rosenberg says investors should buy bonds or seek dividends, because this isn’t a normal recovery.

Kantor, head of research at Barclays Capital in New York, was one of the first economists to call the end of the recession, in March. Barclays sees GDP expanding at a 4 percent rate now, 5 percent in the first quarter and 3.6 percent for 2010. Rosenberg, the chief economist and strategist for Toronto- based Gluskin Sheff + Associates Inc., was among the first to warn of impending recession in 2006.

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