European Stocks Climb as Carmakers, Nestle, Danske Bank Advance

By Peter Levring - Dec 19, 2011 9:03 PM GMT+0700

European stocks climbed, rebounding from the Stoxx Europe 600 Index’s slide last week, as carmakers advanced, offsetting Fitch Ratings’ statement that it may downgrade France, Spain and Italy.

Volkswagen AG (VOW), Europe’s biggest automaker, gained 3 percent after a report that its luxury unit, Audi AG, expects to sell 1.3 million cars in 2011. Air Berlin Plc (AB1) soared after saying that Etihad Airways will increase its stake in the company to 29.2 percent. Nestle SA (NESN) added 1.3 percent. Danske Bank A/S rose 1.7 percent after the lender said chairman, Eivind Kolding, will become its next chief executive officer.

The Stoxx 600 advanced 0.8 percent to 235.52 at 2:01 p.m. in London, rebounding from an earlier decline of as much as 0.7 percent. The benchmark measure slipped 2.8 percent last week, dropping for a second week, as concern lingered that the euro area’s debt crisis is deepening and as the Federal Reserve refrained from taking new action to bolster the world’s largest economy. The gauge has still retreated 15 percent this year.

“Everybody knows rating agencies are saber rattling and suggesting Europe should trade lower on the death of Kim Jong Il seemed somewhat overdone,” said Ole Kjaer Jensen, head of share trading sales at Aabenraa, Denmark-based Sydbank A/S. “Volumes are low and the newsflow is very weak. It seems buyers stepped into the market after the initial selloff.”

The European Central Bank will offer unlimited funding against collateral for as long as three years in a tender tomorrow in President Mario Draghi’s latest attempt to get cash flowing around the financial system. It’s up to lenders to decide what to do with the money, he told the Financial Times in an interview.

North Korea’s Kim

The official Korean Central News Agency said that Kim Jong Il died on Dec. 17 from a heart attack brought on by mental and physical strain, bringing an end to his 17-year tenure. State media urged citizens to “loyally follow” Kim Jong Un, who is at the “forefront of the revolution.”

Fitch Ratings lowered France’s credit outlook and put the grades of nations including Spain and Italy on review for a downgrade, citing the euro area’s failure to find a “comprehensive solution” to its debt crisis. Fitch placed Spain, Italy, Belgium, Slovenia, Ireland and Cyprus on a “Rating Watch Negative” review, which it expects to complete by the end of January, according to a statement.

National benchmark indexes climbed in every western- European market except Iceland. France’s CAC 40 Index added 1.2 percent, Germany’s DAX Index gained 1.1 percent and the U.K. FTSE 100 Index rose less than 0.1 percent.

Belgium’s Rating Cut

Separately, Belgium’s credit rating was cut two levels to Aa3 by Moody’s Investors Service on Dec. 16.

Euro-area finance ministers will hold a conference call at 3:30 p.m. Brussels time today to discuss 200 billion euros ($261 billion) in additional funding through the International Monetary Fund and the mechanics of the so-called fiscal compact that were agreed in the Dec. 9 European Union summit accord, according to two people familiar with the matter.

The ECB’sDraghi damped expectations that the central bank will increase its bond purchases to tame the sovereign-debt crisis, saying the ECB can’t overstep its mandate.

“People have to accept that we have to, and always will, act in accordance with our mandate and within our legal foundations,” Draghi told the FT in an interview, confirmed by the Frankfurt-based ECB. “The important thing is to restore the trust of the people -- citizens as well as investors -- in our continent. We won’t achieve that by destroying the credibility of the ECB.”

Volkswagen, Volvo Advance

Volkswagen rose 3 percent to 118.80 euros after WirtschaftsWoche reported that Audi expects to sell more than 1.3 million cars this year. The magazine cited an interview with Audi’s Chief Executive Officer Rupert Stadler, who said that the euro area’s debt crisis hasn’t had a significant impact on sales.

Volvo Group AB advanced 1.9 percent to 71.55 kronor in Stockholm as the world’s second-largest maker of commercial vehicles reported that sales rose 22 percent in November.

Air Berlin rallied 8.2 percent to 2.50 euros after saying that Etihad Airways, Abu Dhabi’s state-controlled airline, will pay 72.9 million euros to increase its stake in the German airline to 29.2 percent. Etihad will purchase 31.6 million new shares at Dec. 16’s closing price of 2.31 euros a piece, Air Berlin said in a statement. Etihad will keep the shares for at least two years and not increase its stake during that time.

Nestle climbed 1.3 percent to 51.85 Swiss francs as the world’s biggest food company contributed the most to the Stoxx 600’s advance.

Danske Bank, Maersk

Danske Bank advanced 1.7 percent to 73.05 kroner after Denmark’s largest lender said that Kolding will take over from CEO Peter Straarup on Feb. 15. Kolding, 52, is currently also CEO of Maersk Line, the container unit of A.P. Moeller-Maersk A/S. Danske named Kolding as chairman earlier this year.

Maersk, gained 1.9 percent to 35,180 kroner after saying that Soeren Skou will replace Kolding at Maersk Line.

Intesa Sanpaolo SpA, Italy’s biggest lender (ISP) by market value, jumped 4.7 percent to 1.27 euros as Berenberg Bank said the lender remained its preferred name among Italian lenders. UniCredit SpA (UCG) surged 5.7 percent to 71.95 euro cents as financial newspaper Il Sole reported that Fondazione CRT will sell its stakes in Societe Generale SA and Banco de Sabadell SA to free up funds to subscribe to UniCredit’s capital increase.

SGL Carbon SE (SGL) declined 3.7 percent to 43.64 euros after Chief Financial Officer Juergen Muth told the Frankfurter Allgemeine Sonntagszeitung that the German maker of carbon and graphite products regards a takeover by Bayerische Motoren Werke AG and the carmaker’s heiress Susanne Klatten as unlikely. BMW and Klatten together hold about 44 percent in SGL.

BP Plc (BP/), Europe’s second-biggest oil producer, dropped 2.2 percent to 436 pence. Oil and gas companies performed the worst of the 19 industry groups in the Stoxx 600.

To contact the reporter on this story: Peter Levring in Copenhagen at Plevring1@bloomberg.net or

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