Europe Stocks Climb as Greek Lawmakers Said to Agree on Bailout

By Adria Cimino - Feb 9, 2012 8:45 PM GMT+0700

Stocks in Europe (SXXP) rose for the first time in four days as Greece was said to reach a deal on an austerity package and as the European Central Bank held its benchmark interest rate at a record low.

Daimler AG (DAI), the maker of Mercedes-Benz cars, jumped to the highest in six months after reporting a 39 percent increase in quarterly profit. Hugo Boss AG (BOS) climbed as fourth-quarter operating income beat estimates. Credit Suisse Group AG (CSGN) fell 2.4 percent after posting an unexpected loss.

The Stoxx Europe (SXXP) 600 Index advanced 0.5 percent to 264.4 at 1:43 p.m. in London, extending gains after a Greek government official said the prime minister’s office will announce an austerity deal shortly. The benchmark measure has rallied 23 percent from last year’s low and 8.1 percent this year as investors speculated that Greece will accept the spending cuts needed to obtain further aid.

“We’ve seen a bit more confidence creeping into the markets,” Justin Urquhart Stewart, who helps oversee about $3 billion at 7 Investment Management in London, said in a Bloomberg Television interview. “We are seeing shafts of light in the leaden sky coming through in the euro zone.”

ECB (EURR002W) policy makers meeting in Frankfurt left the benchmark interest rate at a record low of 1 percent, as predicted by 55 of 57 economists in a Bloomberg News survey. President Mario Draghi said at a press conference that surveys confirm tentative signs of stabilization in the euro-area economy.

U.K. Asset Purchase

Bank of England officials pumped another 50 billion pounds ($79 billion) into the U.K. economy to protect a nascent recovery from the threat posed by Europe’s debt crisis.The Monetary Policy Committee raised the target for bond purchases to 325 billion pounds, more than a quarter of current outstanding gilts.

Greece’s government is set to announce a deal on austerity measures required for a 130 billion-euro ($173 billion) financing package. An announcement from Prime Minister Lucas Papademos’s office is expected shortly, a government official who declined to be identified said today by telephone.

Greece faces a 14.5 billion-euro bond payment on March 20 and is struggling to obtain financing to avert a collapse of the economy that could spark a new round of contagion in the euro area.

The number of Americans filing first-time claims for unemployment insurance payments unexpectedly declined last week, a report today showed, indicating the labor market recovery is gaining traction.

Earnings Surprises

Of the 112 Stoxx 600 companies that have reported quarterly earnings since Jan. 9, 56 missed analysts’ estimates, compared with 51 that beat projections, according to data compiled by Bloomberg.

“Figures aren’t that bad,” Stewart said. “Companies are honest about write-offs and this is logical.”

Daimler (DAI) jumped 4.9 percent to 46.81 euros, its highest since Aug. 3. The company reported a 39 percent increase in fourth-quarter profit, boosted by demand for the revamped M- Class sport-utility vehicle. Earnings before interest and taxes rose to 2.18 billion euros, exceeding the 2.17 billion-euro average estimate of 12 analysts surveyed by Bloomberg.

A gauge of automakers rose 3.8 percent, for the biggest gain among the 19 industry groups in the Stoxx 600.

Hugo Boss

Preference shares of Hugo Boss rose 1.1 percent to 77.62 euros. The German luxury clothier controlled by buyout firm Permira Advisers said earnings before interest, taxes, depreciation, amortization and one-time items increased to 97 million euros from 77 million euros in the year-earlier period. That beat the 86.4 million-euro average estimate of eight analysts.

Arkema (AKE) rose 5.2 percent to 68.22 euros. The chemical maker was raised to “overweight” from “equal weight” at Morgan Stanley.

KBC Groep NV (KBC) advanced 7.2 percent to 17.90 euros. Belgium’s biggest bank and insurer by market value plans further repayments of state aid this year. KBC said it’s making “considerable progress” with the planned sale of Kredyt Bank SA.

DNB ASA (DNB) rallied 9.7 percent to 70.40 kroner. The Nordic region’s second-largest bank reported a fourth-quarter profit that dropped less than analysts estimated. Net income fell to 4.09 billion kroner from 5.35 billion kroner a year earlier, surpassing the 3.57 billion-krone average estimate of 12 analysts surveyed by Bloomberg.

Declining Costs

Danske Bank A/S (DANSKE) added 4.1 percent to 88.50 kroner. Denmark’s biggest lender reported declining costs relative to income and after it boosted its capital buffer. The bank’s cost- to-income ratio fell to 54.4 percent in the fourth quarter, versus 59.3 percent a year earlier, the bank said.

Credit Suisse declined 2.4 percent to 24.62 Swiss francs. Switzerland’s second-biggest lender said it had a loss in the fourth quarter for the first time since 2008, hurt by “adverse markets” and costs to reorganize the investment bank.

The net loss amounted to 637 million francs ($698 million). That was wider than the 446 million-franc mean profit estimate of nine analysts.

ING Groep NV tumbled 2.6 percent to 7.07 euros. The biggest Dutch financial-services company posted a fourth-quarter profit that missed forecasts after reporting a hedging loss and taking a charge on its U.S. insurance business.

GDF Suez SA (GSZ) lost 4.8 percent to 20.30 euros. The operator of Europe’s biggest natural-gas network reported a 13 percent drop in full-year net profit after mild weather and a regulated rate freeze in France crimped earnings.

Dental Implant

Nobel Biocare Holding AG (NOBN) tumbled 14 percent to 10.79 francs, for the worst performance on the Stoxx 600. The world’s second-biggest dental implant maker reported an increase in fourth-quarter profit as demand improved, driven by North America. Net income rose to 13.3 million euros from 5.2 million euros a year earlier. The earnings missed the average estimate of 18.1 million euros from eight analysts.

Orkla ASA (ORK) retreated 4.5 percent to 45.4 kroner. The Norwegian company that is selling assets to focus on consumer brands reported lower-than-estimated candy and cookie sales at the end of 2011. The company said operating profit at its brands unit fell 4 percent to 876 million kroner ($153 million).

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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