By Corinne Gretler - Oct 12, 2011 8:55 PM GMT+0700
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Greek banks rallied, with Alpha Bank SA and National Bank of Greece SA soaring more than 10 percent. Photographer: Kostas Tsironis/Bloomberg
Oct. 12 (Bloomberg) -- Slovakia’s opposition leader said lawmakers must find a way to approve the revised European Financial Stability Facility, the region's bailout fund, which was rejected yesterday amid a dispute over the future of Prime Minister Iveta Radicova. David Tweed and Owen Thomas report on Bloomberg Television's "Countdown." (Source: Bloomberg)
European stocks climbed to a five- week high as the European Commission’s Olli Rehn said the debt crisis can be resolved, outweighing earnings from Alcoa Inc. (AA) that missed estimates.
Greek banks rallied, with Alpha Bank SA and National Bank of Greece SA (ETE) soaring at least 13 percent. Burberry Group Plc (BRBY), the U.K.’s largest luxury-goods maker, climbed 2.9 percent as sales topped forecasts. ASML Holding NV (ASML) added 3.6 percent after Europe’s biggest semiconductor-equipment maker reported income that beat projections. YIT Oyj (YTY1V), Finland’s largest builder, slumped 4.5 percent after cutting its profit outlook.
The Stoxx Europe 600 Index rose 1.2 percent to 238.15 at 2:54 p.m. in London, having earlier dropped as much as 1 percent. That’s the highest level since Sept. 2. The gauge has still tumbled 18 percent from its high on Feb. 17 amid concern that the sovereign debt crisis in Europe will spread from Greece to the larger economies of Italy and Spain.
“Equity markets are still giving euro-zone leaders the benefit of the doubt in their efforts to stem the crisis,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, wrote in an e-mail. “A greater sense of urgency should not be mistaken for measures to tackle the sovereign debt crisis head-on.”
National benchmark indexes climbed in all of the 18 western-European markets, except in Iceland. Germany’s DAX Index advanced 1.7 percent and the U.K.’s FTSE 100 gained 0.6 percent. France’s CAC 40 increased 2.1 percent.
Coordinated Action
Rehn, the EU’s Economic and Monetary Affairs Commissioner, said in a prerecorded speech to a Dublin conference that the euro area is approaching a consensus on resolving the debt crisis. He said economic growth is stalling and Europe is in “a very dangerous place,” though the region can avert “calamity” by coordinating action, increasing banks’ capital and enhancing growth.
European stocks earlier fell as political wrangling in Slovakia delayed the approval of the euro area’s overhauled bailout fund. The only country that hasn’t ratified the revised European Financial Stability Facility is headed for a second vote after failing to approve the package yesterday. The rejection also triggered the fall of Iveta Radicova’s government, as the vote was tied to a no-confidence motion.
“The vote yesterday was not about the EFSF, but rather about getting rid of the prime minister,” said Peter Braendle, who helps manage $60 billion at Swisscanto Asset Management AG in Zurich. “I expect the parliament to agree in the second round.”
Slovak Vote
Slovakia “must sign up to the rescue fund,” opposition leader Robert Fico said late yesterday, adding that his party, which failed to back the measure, awaits a proposal from the ruling coalition. Radicova said Slovakia must approve the EFSF “as soon as possible.” While no date has been set for a new vote, Finance Minister Ivan Miklos said parliament will probably approve the revamped fund this week.
Alcoa, the first company in the Dow Jones Industrial Average to report earnings this quarter, posted profit that trailed analysts’ estimates, saying European customers “dramatically” cut orders because of economic uncertainty.
The U.S. aluminum producer reported earnings in the third quarter excluding restructuring costs and tax benefits of 14 cents a share, missing the average estimate of 22 cents in a Bloomberg survey. Chief Executive Officer Klaus Kleinfeld said European aluminum demand will decline 13 percent in the second half from the first half.
European industrial production unexpectedly rose for a second month in August as increasing output in countries from France to Portugal and Italy offset a slump in Germany.
European Economy
Production in the 17-nation euro area advanced 1.2 percent from July, when it rose 1.1 percent, the European Union’s statistics office said today. That’s the biggest gain since November 2010. Economists had forecast a drop of 0.8 percent, the median of 32 estimates in a Bloomberg survey showed.
Alpha Bank and National Bank of Greece soared 18 percent to 97.80 euro cents and 13 percent to 1.81 euros, respectively. Piraeus Bank SA (TPEIR) rallied 12 percent to 28.50 euro cents.
Barclays Plc (BARC) jumped 6 percent to 186.20 pence. Societe Generale (GLE) SA and BNP Paribas (BNP) SA, France’s biggest banks, added 5.4 percent to 23.03 euros and 6.9 percent to 36.76 euros.
Sixth Loan
European Commission President Jose Barroso called for a reinforcement of crisis-hit banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund to master Europe’s debt woes.
“Reactive and piecemeal responses to different aspects of the crisis are no longer sufficient,” Barroso said in Brussels. “We now need to get ahead of the curve.”
Burberry gained 2.9 percent to 1,300 pence after reporting fiscal second-quarter sales that beat analysts’ estimates and dispelled concern that demand has slowed with plans to add 15 percent to its average retail space.
Revenue in the three months ended Sept. 30 rose to 463 million pounds ($729 million) from 382 million pounds a year earlier, the London-based company said. The average of 11 estimates compiled by Bloomberg was 447.8 million pounds.
ASML increased 3.6 percent to 27.47 euros after reporting third-quarter net income of 355 million euros ($489 million), topping the average estimate of 323 million euros in a Bloomberg survey of 16 analysts.
Carmakers, Chemicals Gain
Michelin & Cie., the world’s second-largest tiremaker, gained 5.5 percent to 49.12 euros as a gauge of auto stocks posted the best performance of the 19 industry groups in the Stoxx 600. Fiat SpA (F), Italy’s biggest automaker, jumped 6.7 percent to 4.87 euros and Germany’s Daimler AG (DAI) surged 5 percent to 37.64 euros.
Clariant AG (CLN) and Yara International ASA (YAR) led a rally in chemical stocks, climbing 5.1 percent to 9.64 Swiss francs and 3 percent to 242.60 kroner, respectively. K+S AG, Europe’s biggest potash producer, added 2.3 percent to 43.12 euros.
A.P. Moeller-Maersk A/S rose 3.2 percent to 34,980 kroner. The world’s biggest container-shipping line said it agreed to sell its Maersk LNG A/S unit to Teekjay LNG Operating LLC and Marubeni Corp. for $1.4 billion.
YIT plunged 4.5 percent to 12.44 euros. The company cut its full-year outlook for operating profit after making a 10 million-euro provision in the third quarter for an ammonia problem at its flats in St. Petersburg.
Man Group Plc (EMG), the world’s largest hedge fund manager, sank 5.4 percent to 157.20 pence after reporting that the net-asset value of its AHL Diversified fund fell 5.5 percent in the week through Oct. 10.
To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
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