By Sarah Jones - Dec 20, 2011 6:02 PM GMT+0700
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Financial traders work at their desks against a backdrop of the DAX Index curve at the Frankfurt Stock Exchange in Frankfurt. Photographer: Hannelore Foerster/Bloomberg
Dec. 20 (Bloomberg) -- Michael O'Sullivan, head of U.K. research and global asset allocation at Credit Suisse Group AG's private banking unit, talks about investment strategy and the euro-zone economy. He speaks with Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)
Dec. 20 (Bloomberg) -- Christian Gattiker, head of research at Bank Julius Baer & Co., discusses the outlook for stocks and bonds amid the ongoing sovereign-debt crisis. He talks from Zurich with Owen Thomas and Linda Yueh on Bloomberg Television's "On the Move." (Source: Bloomberg)
European stocks climbed, erasing an earlier selloff, as banks rallied after a report showed that German business confidence unexpectedly rose for a second month. Asian shares and U.S. index futures rose.
UniCredit SpA (UCG), BNP Paribas SA and Intesa Sanpaolo SpA (ISP) all climbed more than 3 percent as borrowing costs eased. Arkema SA rallied 4.9 percent amid speculation the company may be a takeover target. AstraZeneca (AZN) Plc paced declining shares after the drugmaker said full-year earnings will be at the low end of its previous forecast.
The benchmark Stoxx 600 gained 0.7 percent to 235.27 at 10:58 a.m. in London, erasing an earlier slide of as much as 0.5 percent. The gauge has still lost 15 percent this year. Standard & Poor’s 500 Index futures expiring in March added 1 percent today, while the MSCI Asia Pacific Index (MXAP) rose 0.3 percent.
“The data is an incremental positive which may have given rise to some short covering,” said Ioan Smith, a director at Knight Capital Europe Ltd. in London. “This follows the surprise improvement last month that was followed by up-ticks in both the ZEW and PMI readings, and together with today’s report suggests that confidence has bottomed out.”
Stocks gained after German business confidence climbed in December, suggesting Europe’s largest economy is weathering the euro area’s debt crisis. The gauge of business confidence, based on a survey of 7,000 executives, rose to 107.2 from 106.6 in November, the Munich-based Ifo institute said today. The median economist forecast called for a drop to 106.
In the U.K., consumer confidence rose in November from a record low as Britons’ expectations for the economy improved in the run-up to Christmas, Nationwide Building Society said.
Stocks initially fell, pacing yesterday’s sell off in U.S. stocks, after the Wall Street Journal reported that large financial institutions will have to hold extra capital.
ECB’s Mario Draghi
European Central Bank President Mario Draghi said yesterday that substantial risks to the economy remain and the law forbids him from increasing government-bond purchases to fight the crisis. The benchmark Stoxx 600 tumbled 2.8 percent last week after the Federal Reserve refrained from taking new action to bolster the world’s largest economy.
Lenders paced advancing shares today. UniCredit rallied 3.8 percent to 72 euro cents. BNP Paribas (BNP) rose 3.8 percent to 29.50 euros and Intesa climbed 4.2 percent to 1.27 euros.
Spain’s Debt Sale
Spain sold 5.64 billion euros ($7.4 billion) of three-month and six-month bills, the Bank of Spain said, compared with the maximum target of 4.5 billion euros that the Treasury had set for the sale.
The average yield on the three-month debt dropped to 1.735 percent, compared with 5.110 percent when the securities were last issued on Nov. 22. The average six-month yield fell to 2.435 percent from 5.227 percent last month.
Arkema jumped 4.9 percent to 49.99 euros. The company, which is cheaper than any of its rival industrial-chemical producers, may be a takeover target for Saudi Basic Industries Corp. (SABIC) and DuPont Co. after deciding to spin off its unprofitable vinyls business.
“It revives the allure for a takeover,” Francoise Delva, an analyst at Gilbert Dupont in Paris, said in a telephone interview. Selling the vinyls unit “is positive for the company, hence it will expose it to the appetite” of potential buyers, she said.
AstraZeneca fell 2.3 percent to 2,880 pence after the drugmaker predicted earnings per share at the low end of its forecast because of research setbacks. The company will take a charge of $381.5 million in the fourth quarter after two experimental medicines had disappointing results.
Core earnings per share will probably be “in the lower half” of the company’s $7.20 to $7.40 estimate, it said.
Deutsche Telekom Drops
Deutsche Telekom declined 1.1 percent to 8.80 euros after AT&T pulled its bid for T-Mobile USA in a phone call between the companies’ chief executive officers, people familiar with the matter said.
AT&T’s Randall Stephenson and Deutsche Telekom’s Rene Obermann agreed that the costs of continuing to fight for the deal unveiled nine months earlier were too high, given the opposition from U.S. regulators, according to the people.
Fresenius Medical Care AG retreated 2.1 percent to 50.14 euros after the world’s biggest provider of kidney dialysis predicted 2011 revenue of 1 to 2 percent below its $13 billion target. The company cited a weakening euro. Fresenius Medical also forecast full-year net income at the lower end of its $1.07 billion to $1.09 billion range.
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
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