Europe Stocks Rise Before Debt-Crisis Summit; Merck KGaA Soars on Earnings

By Peter Levring - Oct 26, 2011 5:09 PM GMT+0700

European stocks fluctuated as the region’s leaders prepared to gather in Brussels for the second summit in four days to address the debt crisis. U.S. index futures rose and Asian shares were little changed.

Merck KGaA surged 6.3 percent as the German drugmaker reported profit that beat estimates. Svenska Handelsbanken AB gained 1.6 percent after reporting earnings that beat estimates. Nyrstar NV slid 4.3 percent as the biggest producer of refined zinc lowered its mine-output forecast.

The benchmark Stoxx Europe 600 Index advanced 0.2 percent to 240.69 at 11:08 a.m. in London after swinging between gains and losses at least 20 times. The measure has climbed 12 percent from this year’s low on Sept. 22 amid speculation policy makers will tackle the region’s sovereign debt woes.

“Markets know what may come from Brussels tonight will not be a full and final solution,” said Thomas Haerter, chief strategist at Swisscanto Asset Management AG in Zurich, who helps oversee about $67 billion. “The problem will only ultimately be solved when debt ratios are much lower in the problem countries than they are today.”

The MSCI Asia Pacific Index rose less than 0.1 percent today, erasing losses as Chinese Premier Wen Jiabao said that economic policy will be fine-tuned as needed and the industry ministry said it is studying “stimulative policies” for smaller companies. Standard & Poor’s 500 Index futures advanced 0.6 percent.

Crisis Summit

European leaders are holding the 14th crisis summit in 21 months to discuss Greece’s second bailout, the recapitalization of banks and strengthening the 440 billion-euro ($612 billion) rescue fund into a more potent weapon.

German lawmakers are set to back a planned increase in the bailout fund’s capacity today, removing one hurdle in the path of a regional agreement. Chancellor Angela Merkel’s coalition ensured cross-party support after persuading the main opposition Social Democrats and Greens to sign up to a motion that includes a cap on German guarantees.

The Stoxx 600 is trading at 10.3 times the estimated earnings of its companies, compared with the two-year low of 9.1 reached on Sept. 23, according to data compiled by Bloomberg. Of the 69 companies in the Stoxx 600 that have released earnings since Oct. 11, almost the same number have missed analyst profit estimates as beaten, Bloomberg data show.

Merck Gains

Merck KGaA advanced 6.6 percent to 63.93 euros, the biggest gain since March 2009. The German maker of cancer drug Erbitux reported third-quarter profit that beat analysts’ estimates because of growth at the Merck Serono pharmaceutical and Millipore equipment businesses.

Handelsbanken rose 1.6 percent to 191.60 kronor. The second-largest Swedish lender reported lower loan losses and net profit that beat analysts’ estimates.

PSA Peugeot Citroen advanced 1.2 percent to 17.27 euros after spokeswoman Cecile Damide said the French automaker may cut as many as 5,000 jobs in Europe in response to weakening demand. The shares had earlier fallen as the company earlier lowered its annual profit forecast.

Telenor ASA climbed 3.6 percent to 95.80 kroner as the largest phone company in the Nordic region raised its full-year sales and profitability outlook after third-quarter earnings increased.

Nyrstar declined 4.3 percent to 6.42 euros in Brussels. The zinc producer lowered its forecast for output from mines because of lower-than-expected deliveries from Talvivaara Mining Co.’s Finnish site, where it has an offtake agreement.

Renewable Energy Corp. ASA, a Norwegian maker of solar components, fell 2.9 percent to 5.12 kroner after reporting a third-quarter net loss of 759 million kroner ($137 million) that was wider than estimated.

To contact the reporter on this story: Peter Levring in Copenhagen at Plevring1@bloomberg.net or

To contact the editor responsible for this story: Andrew Rummer in London at arummer@bloomberg.net;