By Adam Haigh and Corinne Gretler - Dec 29, 2011 9:03 PM GMT+0700
European (SXXP) stocks were little changed after a U.S. report showed initial jobless claims rose more than estimated in the world’s largest economy last week and as Italy missed its fundraising target at a bond auction.
Petroplus Holdings AG, Europe’s largest independent refiner, rose 1.8 percent after France said it’s ready to help the company in its efforts to win back credit. Axa SA led a decline among insurers, losing 2.8 percent. Fiat SpA retreated 1.4 percent after Banca IMI SpA cut its recommendation on the shares. Mining companies followed a drop in copper.
The Stoxx Europe 600 Index (SXXP) gained 0.2 percent to 240.72 at 2:01 p.m. in London. The gauge has rallied 12 percent (SXXP) from this year’s low on Sept. 22 amid better-than-estimated U.S. economic data and optimism that policy makers will contain the debt crisis.
A U.S. Labor Department report showed that first applications for unemployment benefits increased (USURTOT) to 381,000 last week, after falling to the lowest since April 2008 in the previous period. The median forecast of 32 economists surveyed by Bloomberg News had called for 375,000 claims.
The four-week moving average for claims, a less volatile measure than weekly figures, dropped to 375,000 last week, the lowest level since June 2008.
Investors awaited a report from the National Association of Realtors at 10:00 a.m. New York time that may show pending sales of previously owned homes in the U.S. rose 1.5 percent in November after a 10 percent jump in the prior month, according to economists’ estimates.
Italian Bond Auction
In Europe, Italy missed its fundraising target at the auction of debt maturing between 2014 and 2022, while its borrowing costs eased.
“The yield on Italian 10-year bonds auctioned coming at just under 7 percent shouldn’t be classified as a success,” said Manish Singh, the London-based head of investment at Crossbridge Capital, which has more than $2 billion under management. “Lingering doubts and the expected slowdown in euro-zone growth in 2012 means investors remain on the edge.”
The Treasury in Rome sold 6 percent bonds due in 2014 to yield 5.62 percent, down from 7.89 percent at the previous sale on Nov. 29 and priced its 5 percent 2022 bond to yield 6.98 percent, compared with 7.56 percent on Nov. 29. The Treasury also sold bonds due in 2021 and a floating-rate security due 2018. Italy’s bond sale followed yesterday’s auction of bills, where yields fell.
Italy Credit Risk
“Although distorted by thin holiday trading, today’s sale is a more accurate gauge of underlying confidence in Italian debt,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, wrote in an e-mail. “Buying 10-year Italian bonds is a leap of faith which investors are prepared to take only at very high interest rates. There are simply too many risks and uncertainties surrounding Italy.”
The nation expects to raise almost 450 billion euros from debt sales next year, enough to cover 202 billion euros of maturing bonds and finance a 23.6 billion-euro deficit, Maria Cannata, director of public debt, said in a Dec. 24 interview with newspaper Il Sole 24 Ore.
The Stoxx 600 has retreated 13 percent in 2011 as the debt crisis spread across the major economies of the euro area.
Post-Christmas trading has been low, with average daily volume (SXXPVOLC) in the Stoxx 600 in the last two sessions dipping to 31 percent of this year’s average.
National benchmark indexes advanced in 9 of the 18 western European (SXXP) markets today. Germany’s DAX rose 0.4 percent, while France’s CAC 40 added 0.2 percent. The Swiss Market Index lost 0.3 percent.
Petroplus Rebounds
Petroplus gained 1.8 percent to 1.68 Swiss francs, paring some of its 52 percent loss in the previous two sessions. The French government is “fully mobilized” in helping Europe’s largest independent refiner in discussions with its banks, Finance Minister Francois Baroin and Industry Minister Eric Besson said in a statement yesterday after the markets closed.
PNE Wind AG (PNE3), the German wind company, jumped 7.3 percent to 1.88 euros after it sold its shares in a planned North Sea offshore project to a fund managed by Ventizz Capital Partners AG.
Axa, Europe’s second-biggest insurer, declined 2.8 percent to 9.71 euros and Ageas dropped 1.3 percent to 1.18 euros. Insurers were the worst performing group (SXXP)of all 19 industry segments on the Stoxx 600.
Fiat retreated 1.4 percent to 3.48 euros after Monica Bosio, a Banca IMI analyst, cut the stock to “hold” from “add.”
Mining shares dropped as copper declined for a second day on the London Metal Exchange. Petropavlovsk Plc slid 2.6 percent to 602 pence and Voestalpine AG lost 1.7 percent to 20.95 euros, while Vedanta Resources Plc dropped 1.9 percent to 992 pence.
Raiffeisen Bank International AG (RBI) led losses in a gauge of European banks (SX7P), slumping 3.2 percent to 19.70 euros. Banca Popolare dell’Emilia Romagna Scrl (BPE) lost 3.2 percent to 5.54 euros. Banco Espirito Santo SA declined 2.2 percent to 1.30 euros.
To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Corinne Gretler in Zurich at cgretler1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
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