By Peter Levring - Feb 14, 2012 8:00 PM GMT+0700
Feb. 14 (Bloomberg) -- Julian Jessop, chief global economist at Capital Economics Ltd., talks about Greece's membership of the euro and the outlook for gold and other commodities. He speaks with Mark Barton on Bloomberg Television's "On the Move." (Source: Bloomberg)
European (SXXP) stocks pared gains, after the Stoxx Europe 600 Index yesterday rallied the most in a week, as Rio Tinto Group slipped, offsetting a report showing that German investor confidence rose to a 10-month high. U.S. index futures were little changed, while Asian shares slid.
Royal Dutch Shell Plc (RDSA) gained 1 percent, dragging the Stoxx 600 higher. ThyssenKrupp AG (TKA), Germany’s biggest steelmaker, fell 2.5 percent after posting a first-quarter loss following project delays. TDC A/S (TDC) slipped 4.7 percent after private-equity investors sold shares in Denmark’s biggest phone company.
The Stoxx 600 gained 0.1 percent to 263.3 at 12:59 p.m. in London, extending yesterday’s 0.7 percent rally. The benchmark measure has advanced 7.7 percent this year amid optimism that the euro area will contain its crisis and as U.S. economic reports beat forecasts. S&P 500 futures expiring in March slipped less than 0.1 percent today, while the MSCI Asia Pacific Index dropped 0.4 percent.
“It’s good for Europe that its biggest economy is improving as German exporters are benefiting from the cheaper euro,” said Henrik Drusebjerg, a Copenhagen-based senior strategist at Nordea Bank AB, which helps oversee $230 billion. “Many European (SXXP) businesses are suppliers to German exporters and will benefit from an uptick in the German economy.”
German Investor Confidence
German investor confidence increased in February more than economists had forecast, rising to a 10-month high. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 5.4 from minus 21.6 in January. Economists had predicted a gain to minus 11.8, according to the median of 40 estimates in a Bloomberg News survey.
Italy sold 6 billion euros ($7.9 billion) of bonds at an auction, meeting its target. The country’s borrowing costs fell to the lowest since March even after Moody’s Investors Service lowered its rating for the nation. Italy’s Treasury sold 4 billion euros of benchmark securities due in November 2014 to yield 3.41 percent, down from 4.83 percent at the last auction of similar-maturity bonds on Jan. 13. The Rome-based Treasury also sold a total of 2 billion euros of bonds due in 2015 and 2017 to yield 3.77 percent and 4.26 percent respectively.
Italy, Spain Downgraded
Stocks declined earlier today as Moody’s said it may strip the U.K. and France of their top Aaa ratings, citing the euro area’s debt crisis. Spain was downgraded to A3 from A1 yesterday, Italy to A3 from A2 and Portugal to Ba3 from Ba2, all with negative outlooks. Slovakia, Slovenia and Malta also had their ratings lowered.
“Policy makers have made steps forward, but we do not think they have done enough to reassure the market that we are on a stable path,” said Alistair Wilson, chief credit officer for Europe at Moody’s in London. “What will guide long-term ratings is the clarity and the performance of policy makers and the macro picture.”
In the U.S., retail sales probably rose in January by the most in four months, led by growing demand for autos, economists said before a report today. A Commerce Department report published at 8:30 a.m. in Washington will show a 0.8 percent increase, exceeding a 0.1 percent advance in December, according to the median forecast of economists surveyed by Bloomberg News.
Shell climbed 1 percent to 2,318.5 pence as Europe’s largest oil company limited losses on the Stoxx 600.
L’Oreal Shares Advance
L’Oreal SA (OR) gained 3 percent to 84.12 euros after the world’s largest cosmetics maker said it’s confident of achieving sales and earnings growth this year after reporting a 7.7 percent increase in 2011 operating profit, beating analysts’ estimates.
L’Oreal also said that Liliane Bettencourt will leave the company’s board and be replaced by her grandson Jean-Victor Meyers. Meyers, 25, studied economics and management and is a director of Tethys, the Bettencourt family holding company.
Deutsche Boerse AG (DB1) jumped 3.2 percent to 50.32 euros after the German bourse operator posted a fourth-quarter profit amid lower costs and higher sales while announcing a stock buyback and dividend.
Rio Tinto Group decreased 2 percent to 3,768 pence as the world’s third-biggest mining company approved a $4.5 billion expansion of its Chilean Escondida copper mine with BHP Billiton Ltd. (BHP) The mine accounts for about a fifth of all copper produced in Chile, the world’s top supplier of the metal. BHP Billiton slipped 0.6 percent to 2,071 pence.
ThyssenKrupp Slides
ThyssenKrupp dropped 2.5 percent to 21.36 euros after reporting a loss before interest and taxes of 33 million euros, compared with a profit of 261 million euros a year earlier.
TDC slid 4.7 percent to 43.09 euros as its private-equity investors sold 750 million euros of stock in a sale arranged by Morgan Stanley. Investors in NTC Holding GP & Cie. SCA, the consortium of buyout firms, sold about 128 million shares, raising 5.6 billion Danish kroner ($99 million).
Raiffeisen Bank International AG (RBI), the biggest Eastern European lender, retreated 2.8 percent to 27.11 euros as Moody’s cut the rating outlook of Austria to “negative” from “stable.”
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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