By Peter Levring - Nov 2, 2011 9:54 PM GMT+0700
European stocks rose, snapping the biggest three-day drop in almost two months, as the Federal Reserve prepared to release its latest policy statement.
Randgold Resources Ltd. (RRS) rallied 8.2 percent after forecasting a 22 percent increase in gold output next year. Lloyds Banking Group Plc (LLOY) slid 7.4 percent as Chief Executive Officer Antonio Horta-Osorio took leave of absence from his duties following medical advice. Logica Plc (LOG) sank 8.4 percent as the computer services provider had sales that missed estimates.
The Stoxx Europe 600 Index advanced 1 percent to 237.43 at 2:53 p.m. in London, having swung between gains and losses at least 14 times. The gauge retreated 5.8 percent over the previous three days as Greek Prime Minister George Papandreou called a referendum on the nation’s latest bailout package, spurring concern that a rejection of the measures may push the country into default.
“The situation remains better than three weeks ago, despite the uncertainty caused by Papandreou moving on his own to issue the referendum,” said Witold Bahrke, a Copenhagen- based senior strategist at PFA Pension A/S, which manages $45 billion. “The ring-fencing of Greece is ongoing.”
National benchmark indexes climbed in 13 of the 18 western European markets today. The U.K.’s FTSE 100 rose 1.1 percent and France’s CAC 40 advanced 1.5 percent. Germany’s DAX Index gained 2.2 percent.
VStoxx Drops
The VStoxx Index (V2X), which measures the cost of protecting against a decline in shares in the Euro Stoxx 50, slipped 2.6 percent to 41.84 to snap a 42 percent, three-day climb.
Fed officials are probably engineering a further round of large-scale asset purchases, while they are unlikely to announce a decision today, according to economists in a Bloomberg survey. Sixty-nine percent said Chairman Ben S. Bernanke will embark on a third round of quantitative easing, with 36 percent predicting the move in the first quarter of next year, according to a poll of 42 economists from Oct. 26-31.
The Federal Open Market Committee plans to release a policy statement at 12:30 p.m. in Washington after a two-day meeting. The FOMC forecasts will be released at 2 p.m., and Bernanke is scheduled to hold a press conference beginning at 2:15 p.m.
Euro-area leaders, racing to prevent their week-old debt crisis strategy from unraveling, are holding emergency talks today to tell Greece there is no alternative to the budget cuts imposed in the bailout plan.
Summoned to Cannes
Papandreou was summoned to Cannes on the eve of a Group of 20 summit where he will hear from French President Nicolas Sarkozy that the “only way to resolve Greek debt problems” is through a deal hammered out last week in a six-day crisis- management marathon.
“The prospects of Greece leaving the euro have grown and investors are positioning for more bad news from politicians,” said Henrik Drusebjerg, who helps oversee $230 billion as senior strategist at Nordea Bank AB in Copenhagen. “The other euro countries can’t sit around and wait until the Greeks are done with the referendum. Papandreou may be told today that the other 16 countries will go ahead with plans to bolster the euro area with or without Greece.”
The Stoxx 600 pared gains today as two people with knowledge of the deal said the euro region’s rescue fund, the European Financial Stability Facility, will delay a planned 3 billion-euro bond sale because of market conditions.
Manufacturing Contracts
Europe’s manufacturing industry contracted for a third month in October, adding to signs the euro-area economy is edging toward a recession. A gauge based on a survey of purchasing managers in the 17-nation euro region fell to 47.1 from 48.5 in September, London-based Markit Economics said today. That’s below an initial estimate of 47.3 published on Oct. 24. A reading less than 50 indicates contraction.
Randgold Resources climbed 6.2 percent to 7,155 pence as the miner said it expects its gold production to increase as much as 22 percent next year as output in Mali and Ivory Coast rises. Output may jump to 850,000 ounces to 900,000 ounces in 2012 from a target of 740,000 ounces to 760,000 ounces this year, Chief Executive Officer Mark Bristow said today in an interview in London.
Rio Tinto, the world’s second-biggest mining company, advanced 2.4 percent to 3,330.5 pence as copper rose 2.5 percent on the London Metal Exchange. Antofagasta Plc (ANTO) advanced 2.7 percent to 1,144 pence as the copper producer controlled by Chile’s Luksic family reported a 17 percent jump in third- quarter output.
Next Sales
Next Plc (NXT), the U.K.’s second-largest clothing retailer, advanced 5.6 percent to 2,699 pence after reporting growth in third-quarter brand sales that exceeded analyst estimates.
Lundin Petroleum AB (LUPE), the oil explorer with a stake in the giant Avaldsnes-Aldous Major North Sea find, rose 4.1 percent to 159.20 kronor after forecasting higher production in 2012. The company reported third-quarter earnings before interest, taxes, depreciation and amortization of $262 million, beating the average analyst estimate of $223 million.
G4S Plc (GFS) climbed 2.7 percent to 251.8 pence as analysts upgraded the world’s largest security company after it abandoned an $8.3 billion takeover of Denmark’s ISS A/S. The shares were added to the “most preferred” list at UBS AG and upgraded at Credit Suisse Group AG and Exane BNP Paribas.
Lloyds, Britain’s biggest mortgage, dropped 7.4 percent to 28.29 pence. Horta-Osorio is taking leave of absence from his duties as CEO following medical advice and will be replaced in the interim by Finance Director Tim Tookey.
Logica, an Anglo-Dutch computer services provider, sank 8.4 percent to 82 pence, the biggest drop in almost three months. The company posted third-quarter sales that trailed analysts’ estimates and cut its full-year earnings forecast.
Standard Chartered Plc (STAN), the U.K.’s second-largest bank by market value, declined 1.2 percent to 1,421 pence after revenue growth slowed in the third quarter.
Sampo Oyj (SAMAS), which owns the Nordic region’s largest property and casualty insurer, dropped 1.7 percent to 18.94 euros as third-quarter profit missed estimates.
To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
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