European Stocks Erase Gains as Greek Lenders Slide; BHP Billiton Advances

By Sarah Jones - Oct 24, 2011 6:05 PM GMT+0700

European stocks erased gains as Greek lenders and oil companies retreated, offsetting signs of stronger growth in China and Japan. Asian shares rallied, while U.S. futures were little changed.

BHP Billiton Ltd. (BHP) and Rio Tinto Group both jumped more than 2 percent as base metals surged. TomTom NV (TOM2) soared 19 percent after reporting better-than-estimated net income. Greek banks tumbled amid reports that creditors may have to write down as much as 60 percent of their holdings in Greek debt.

The benchmark Stoxx Europe 600 Index advanced less than 0.1 percent to 238.97 at 12:04 p.m. in London after earlier climbing as much as 0.8 percent. The MSCI Asia Pacific Index jumped 2.7 percent, while futures on the Standard & Poor’s 500 Index expiring in December slid 0.2 percent.

Leaders at yesterday’s summit in Brussels ruled out tapping the European Central Bank’s balance sheet to boost the euro area’s rescue fund, the European Financial Stability Facility, and excluded a forced restructuring of Greece’s debt. The politicians looked at strengthening the International Monetary Fund’s role and outlined plans to aid banks.

The complete blueprint for the rescue fund won’t come together until a summit in two days. Like yesterday, it will start with all 27 European Union leaders before the 17 heads of the euro-area economies gather on their own.

The Stoxx 600 has rallied for four consecutive weeks, its longest stretch of weekly gains since December, as investors speculated leaders will find a solution to Europe’s debt crisis that has Greece teetering on the edge of a default. The gauge has still tumbled 18 percent from this year’s high on Feb. 18.

Stocks rallied in Asia today and U.S. futures erased earlier losses after a report showed that China’s manufacturing may expand in October for the first time in four months, snapping the longest contraction since 2009. A separate release showed Japan’s exports increased in September more than economists had forecast.

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

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