European Stocks Climb as Italy Seeks to Cut Debt; UniCredit, Intesa Gain

By Adam Haigh - Dec 5, 2011 11:37 PM GMT+0700

European stocks rose, with the benchmark Stoxx Europe 600 Index extending its biggest weekly rally since November 2008, as Italy’s Prime Minister Mario Monti introduced a proposal to cut his nation’s debt.

A gauge of lenders led gains on the Stoxx 600 as UniCredit SpA (UCG), Intesa Sanpaolo SpA (ISP) and BNP Paribas SA jumped more than 3.5 percent. Aberdeen Asset Management Plc (ADN) climbed 4.2 percent after Scotland’s biggest fund manager reported profit and sales that topped estimates. SAP AG (SAP) fell 2.7 percent as the world’s largest maker of business-management software agreed to buy SuccessFactors Inc. for $3.4 billion in cash.

The Stoxx 600 rose 1 percent to 243.09 at the close, trimming the benchmark measure’s decline this year to 12 percent as concern abated that the euro area’s sovereign-debt crisis will intensify.

“If the euro zone holds together -- as we suspect it will -- there should be considerable upside for stocks,” said Ian Scott, chief global strategist at Nomura Holdings Inc. “More than a recession is already in the price.”

The Stoxx 600 last week posted its largest advance in three years, as central banks cut the interest rate on dollar funding, China reduced its reserve ratio for banks and euro-area policy makers planned to channel as much as 200 billion euros ($269 billion) through the International Monetary Fund to fight the debt crisis. The benchmark measure has rallied 13 percent from this year’s low on Sept. 22 amid optimism policy makers will solve the crisis.

National benchmark indexes climbed in every western- European (SXXP) market. France’s CAC 40 Index advanced 1.4 percent and the U.K.’s FTSE 100 Index rose 0.4 percent. Germany’s DAX Index increased 0.6 percent.

Mario Monti’s Plan

Monti presents a plan to reduce the European Union’s second-biggest debt to the Chamber of Deputies in Rome today. The budget package comes at the start of a critical week for Europe’s efforts to prevent Italy and Spain from succumbing to the crisis and causing a breakup of the single currency.

France and Germany want a new EU treaty to set out the rules for euro-area governments, President Nicolas Sarkozy said after meeting Chancellor Angela Merkel.

“We want it to be impossible for the deregulation that led to the euro zone’s current situation to recur,” Sarkozy said in Paris. “Our preference is for a treaty of 27, but we’re perfectly ready to have a treaty of 17.”

Merkel and Sarkozy are developing a plan for stricter enforcement of the region’s deficit rules that they will present to EU leaders at a summit on Dec. 9.

A gauge of European banks advanced 2.7 percent. UniCredit, Italy’s biggest lender, jumped 5.4 percent to 83.6 euro cents. Intesa Sanpaolo added 3.9 percent to 1.35 euros and BNP Paribas, France’s largest bank (BNP), rose 5.5 percent to 33.34 euros.

Santander Gains

Banco Santander SA gained 2.9 percent to 5.95 euros after Spain’s biggest lender (SAN) said it will seek to raise 1.97 billion euros by swapping preferred shares sold to retail customers in 2009 for newly issued stock as part of a strategy to increase its capital.

Aberdeen Asset Management climbed 4.2 percent to 212 pence as full-year profit surged after revenue rose faster than costs and it sold more higher-margin products.

SAP slipped 2.7 percent to 43.50 euros. The German software maker agreed to buy San Mateo, California-based SuccessFactors on Dec. 3 to better meet demand for new technologies such as cloud computing, real-time analytics and mobile applications.

UBS AG downgraded SAP to “neutral” from “buy,” saying that the software company’s decision to acquire technology rather than develop it internally does “raise questions about SAP’s competitiveness in other on-demand areas.”

Commerzbank AG (CBK) declined 4.3 percent to 1.43 euros as Germany’s second-largest bank offered to repurchase as much as 600 million euros of hybrid equity instruments.

Michael Page International Plc (MPI) slumped 5.9 percent to 343.5 pence after the recruiter said full-year pretax profit will miss analysts’ estimates.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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