By Peter Levring - Jan 31, 2012 5:02 PM GMT+0700
European stocks rose, heading for their best start to a year since 1998, as most countries in the region agreed to tighter budget controls. U.S. index futures and Asian shares also advanced.
BP Plc and Royal Dutch Shell Plc tracked gains in crude prices. ARM Holdings Plc (ARM) jumped 4.8 percent after fourth-quarter revenue topped estimates. European Aeronautic Defense & Space Co. gained 1 percent after UBS AG advised buying the shares.
The Stoxx Europe 600 Index rose 0.8 percent to 254.61 at 10:01 a.m. in London, rebounding from two days of declines. The benchmark gauge has rallied 4.1 percent this month, the biggest January gain since 1998. Futures on the Standard & Poor’s 500 Index added 0.5 percent today. The MSCI Asia Pacific Index increased 0.8 percent.
“Markets are in a risk-on mood and may just continue rising when events, such as the summit, reveal no new risks,” said Alexander Kraemer, a cross-asset strategist at Commerzbank AG in Frankfurt. “European leaders may have learned they have to address problems and cannot put their head in the sand and hope problems go away.”
European Union leaders, meeting in Brussels yesterday, agreed on a fiscal-discipline treaty that allows for sanctions on high-deficit states and requires members to enact laws to limit budget shortfalls. Britain and the the Czech Republic refused to sign the pact.
The policy makers also decided to bring the region’s permanent bailout fund, the European Stability Mechanism, into operation on July 1, a year before schedule.
Bull Market
The Stoxx 600 rallied 20 percent from its most-recent low on Sept. 22 through Jan. 26, entering a bull market as per the common definition by analysts, as the U.S. economy maintained its recovery and speculation grew that the euro area will contain its sovereign-debt crisis.
Greece aims to complete debt-swap talks with bondholders this week. Prime Minister Lucas Papademos told reporters after summit that he is “strongly committed” to reaching a deal.
German unemployment dropped more than economists forecast to a two-decade low in January. The number of people out of work fell a seasonally adjusted 34,000 to 2.85 million, the Federal Labor Agency said. That’s the biggest drop since March. Economists had forecast a decline of 10,000, the median of 32 estimates in a Bloomberg News survey. The adjusted jobless rate slipped to 6.7 percent from 6.8 percent.
Portugal’s Debt
Portuguese borrowing costs declined from a euro-era high after Prime Minister Pedro Passos Coelho said his country’s debt has been judged “perfectly sustainable” by the EU and International Monetary Fund and that there is no risk of writedowns on the bonds.
BP, Europe’s second-largest oil producer, gained 2.8 percent to 471.1 pence. Shell and Total SA gained 1.3 percent to 2,257.5 pence and 1.5 percent to 40.41 euros, respectively.
Oil gained after the December industrial output rose more than forecast in Japan, the third-biggest crude consumer.
ARM Holdings jumped 4.8 percent to 626 pence. The maker of processors for Apple Inc.’s iPads and iPhones said fourth- quarter revenue climbed 21 percent as the company increased the number of licenses sold for smartphones and tablet computers.
EADS, which makes Airbus and eurofighter jets, advanced 1 percent to 25.65 euros after UBS raised its recommendation on the shares to “buy” from “neutral.”
BSkyB, Repsol
British Sky Broadcasting Group Plc (BSY) gained 3.3 percent to 687.5 pence after first-half operating profit rose 16 percent, topping analysts’ estimates, as the U.K.’s biggest pay-TV broadcaster sold more broadband products to its subscribers.
Repsol YPF SA (REP), the biggest oil company in Spain, fell 2.8 percent to 20.90 euros in Madrid after Pagina/12 newspaper said Argentine officials had discussed a takeover of its YPF unit, the South American country’s biggest oil producer, without saying where it obtained the information.
Vestas Wind Systems A/S (VWS), the world’s biggest maker of wind turbines, climbed 3.4 percent to 64.05 kroner after winning its first order in China.
To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
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