By Peter Levring - Dec 1, 2011 8:30 PM GMT+0700
European stocks swung between gains and losses as concern that the debt crisis is spreading and China’s economy is slowing offset auction results that showed investor demand continues for Spanish and French debt. U.S. index futures were little changed, while Asian shares rose.
Novartis AG (NOVN) and Roche Holding AG (ROG) led health-care companies higher, gaining at least 1.5 percent. Hochtief AG (HOT) and Vinci SA declined after an airport deal between them fell through. Norsk Hydro ASA (NHY) dropped 1.1 percent after predicting aluminum demand growth will weaken.
The Stoxx 600 gained 0.1 percent to 240.41 at 1:28 p.m. in London after earlier falling as much as 0.8 percent. The gauge has advanced 8.5 percent this week as euro-area leaders agreed to insure sovereign-bond issues and central banks eased dollar funding for banks. The December contract on the Standard & Poor’s 500 Index (SPX) retreated less than 0.1 percent. The MSCI Asia Pacific Index jumped 3.2 percent.
“Today, the setback is all about recouping from yesterday’s massive climb,” said Morten Kongshaug, a chief equity strategist at Danske Bank A/S in Copenhagen. “The stock market is fundamentally strong and all the risk awareness comes down to the European debt crisis.”
European stocks (SXXP) yesterday rose 3.6 percent to post their biggest four-day rally since November 2008 as the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut its reserve ratio for banks.
Watching Policy Makers
“Something big has to happen given the distortion we have in Europe,” said Matthias Fankhauser, fund manager at Clariden Leu in Zurich. “Everybody is waiting for big decisions from European politicians. Policy makers have to come up with convincing solutions. Otherwise the euro area would be severely damaged.”
China’s manufacturing recorded the weakest performance since the global recession eased in 2009, underscoring the case for monetary stimulus.
A purchasing managers’ index compiled by the China Federation of Logistics and Purchasing slid to 49 in November, lower than all but two of 18 forecasts in a Bloomberg News survey. Readings below 50 signal a contraction.
Premier Wen Jiabao is shifting policy gears as Europe’s woes combine with a domestic real-estate slowdown to impair the outlook for growth. Asian nations from China to India to South Korea will cut key interest rates next year as the global economy deteriorates, Goldman Sachs Group Inc. predicted today.
Debt Auctions
Spanish bonds gained and the euro strengthened after the government sold the maximum amount of debt planned at an auction. France sold 4.3 billion euros of securities, compared with a maximum 4.5 billion euros of debt available on offer as 10-year bonds sold were priced to yield 3.18 percent, less than at a previous auction on Nov. 3.
In the U.S., a report at 10 a.m. in New York may show manufacturing grew in November at the fastest pace in five months, showing factories will keep supporting the economic expansion through the end of the year, economists said.
The Institute for Supply Management’s factory index rose to 51.8 last month from 50.8 in October, economists surveyed by Bloomberg News forecast. Fifty is the dividing line between growth and contraction.
BP’s Canadian Deal
Novartis climbed 1.9 percent to 50.15 Swiss francs and Roche advanced 2 percent to 147.90 francs as a gauge of health- care companies was among the best performers of the Stoxx 600 index.
Hochtief fell 2.6 percent to 41.28 euros and Vinci SA (DG), Europe’s biggest builder, slipped 1.2 percent to 32.72 euros. Vinci pulled out of bidding for the purchase of Hochtief’s airport-operating business, Societe Generale said in a research note today, citing Vinci’s chief financial officer.
Norsk Hydro, Europe’s third-largest aluminum maker, fell 1.1 percent to 27.37 kroner after forecasting lower global growth in demand for the metal. Goldman Sachs recommended selling the shares on low returns and near-term weakness.
Zurich Financial rose 1.7 percent to 203.50 francs after the company confirmed its targets for return on equity. It also said that achieving a return of 2 percentage points below the target “is more realistic” if current economic conditions persist.
Salzgitter advanced 2.3 percent to 39.24 euros after saying a tax gain will boost 2011 profit after taxes. The benefit resulted from a combination of its domestic holdings into a single unit. The company’s forecast of about 200 million euros in fiscal 2011 pretax profit is unchanged.
To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net
To contact the editors responsible for this story: Will Hadfield at whadfield@bloomberg.net; Andrew Rummer at arummer@bloomberg.net
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