By Corinne Gretler - Nov 11, 2011 8:04 PM GMT+0700
European stocks advanced after the Italian Senate approved an austerity package, raising optimism that the euro area’s second-most indebted country will contain the debt crisis. U.S. index futures and Asian shares rose.
Telecom Italia SpA (TIT) gained 4.7 percent after reporting better-than-expected third-quarter earnings. Banks and insurers rallied. International Consolidated Airlines Group SA, the company created by the merger of British Airways and Spain’s Iberia, jumped 5.2 percent.
The Stoxx Europe 600 Index increased 0.8 percent to 237.21 at 12:30 p.m. in London, on optimism the vote will be followed by a new government led by former European Union Competition Commissioner Mario Monti. The gauge has still lost 1.1 percent so far this week as surging bond yields in Italy and France fueled concern the crisis is spreading. Standard & Poor’s 500 Index futures expiring in December rose 0.8 percent. The MSCI Asia Pacific Index also added 0.8 percent today.
“In the eyes of financial markets, Mario Monti seems to be the best possible choice at present,” said Alessandro Fezzi, senior market analyst at LGT Capital Management in Pfaeffikon, Switzerland. “He might even win back market confidence. Even so, the success of the painful reforms is by no means guaranteed and financial markets will soon test the new government.”
Senate Vote
The Senate in Rome voted 156 to 12 to pass the package of measures promised to the European Union in a bid to boost growth and cut Italy’s debt of 1.9 trillion euros ($2.6 trillion), the world’s fourth biggest. Opposition lawmakers did not take part in the vote, allowing the bill to pass.
In Greece, a new unity government led by Lucas Papademos will be sworn in today with a mandate to implement budget measures and decisions related to a 130 billion-euro bailout agreed on an Oct. 26. Elections may take place on Feb. 19.
“The new great white hopes in Athens and Rome are likely to receive early praise from the markets,” Fezzi said. “But how long it will last is uncertain.”
About 48 percent of the 291 companies in the Stoxx 600 that have reported earnings since Oct. 11 topped analysts’ estimates for per-share profit, according to data compiled by Bloomberg. About 44 percent missed the projections.
“European earnings were rather mixed,” Otto Waser, chief investment officer at Research & Asset Management AG, told Bloomberg Television from Zurich. “We’re incrementally encouraged by the guidance for the current quarter of the companies. On average, earnings were more supportive than we thought six weeks ago.”
U.S. Consumer Confidence
A report at 9:55 a.m. today in New York may show U.S. consumer sentiment increased this month. The Reuters/University of Michigan preliminary sentiment survey for November probably climbed for a third month, rising to 61.5 from 60.9 last month, according to the median of 67 economists in a Bloomberg survey.
Telecom Italia jumped 4.7 percent to 88.6 euro cents after third-quarter net income surged 33 percent to 807 million euros, beating analysts’ estimates for 708.5 million euros.
National Bank of Greece SA (ETE) and Alpha Bank SA led a gauge of European banks higher, surging 4.4 percent to 2.13 euros and 4.8 percent to 1.10 euros, respectively.
Schroders Plc (SDR), the U.K.’s largest publicly traded money manager by market value, climbed 5.1 percent to 1,371 pence after Carolyn Dorrett, an analyst at Deutsche Bank AG, raised the stock to “hold” from “sell.”
Insurers Gain
Allianz SE (ALV), Europe’s biggest insurer, rose 4.1 percent to 75.19 euros after saying it is “ready to take a closer look” at assets such as mortgages that some troubled banks may sell. The company posted a bigger-than-estimated 84 percent drop in third-quarter profit after writing down Greek government debt and investments in financial companies.
Mapfre SA gained 4 percent to 2.55 euros as a gauge of European insurers was among the best performers of the 19 industry groups on the Stoxx 600. Aegon NV added 2.9 percent to 3.27 euros.
IAG jumped 5.2 percent to 149.10 euros after saying it targets an operating profit of about 1.5 billion euros in 2015.
SMA Solar Technology AG (S92), Germany’s biggest solar-power company by market value, rallied 6.6 percent to 48.43 euros after reporting earnings and sales that beat analysts’ estimates.
The company reported a third-quarter net income of 52.9 million euros and sales of 477 million euros. Analysts in a Bloomberg survey had called for a profit of 48 million euros profit and sales of 423 million euros.
Schibsted Cost Cuts
Schibsted ASA (SCH) climbed 3.5 percent to 140.30 kroner, the biggest jump in two weeks. The company said it will implement cost cuts of 190 million kroner ($33 million) to 210 million kroner for the Scandinavian newspaper operations. The measures in Norway and Sweden will imply restructuring charges of about 200 million kroner, probably during the fourth quarter of this year, the company said.
Societe Television Francaise 1 (TFI), the operator of France’s most-watched TV channel, plunged 15 percent to 7.67 euros, the largest decline since February 2009, after third-quarter net income dropped to 6.6 million euros from 95.5 million euros a year earlier. The company said it expects full-year revenue to decrease 1 percent.
Galp Energia SGPS, Portugal’s largest oil company, slumped 12 percent to 13.07 euros, its biggest decline in almost three years, after an agreement to sell a 30 percent stake in its Brazil unit to China’s Sinopec Group for $3.54 billion.
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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