HSBC Holdings and BNP Paribas advance as U.S. nationalization fears fade
European shares advanced on Wednesday, as remarks from Federal Reserve Chairman Ben Bernanke soothed bank-sector-nationalization worries and investors reacted positively to earnings from Deutsche Boerse and Henkel.
Picking up on a sharp rally for U.S. shares on Tuesday, investors pushed the pan-European Dow Jones Stoxx 600 index up 1.4% to 175.29.
Asia stocks also advanced, while U.S. stock futures were muted after the previous session's strong gains. See Asia Markets. See Indications.
On a national regional level in Europe, the German DAX 30 index rose 1.6% to 3,958.76, the French CAC-40 index climbed 1.6% to 2,750.74 and the U.K. FTSE 100 index advanced 1.4% to 3,871.23.
Banks rose sharply on Wall Street on Tuesday after Bernanke played down any notion of nationalizing major U.S. banks.
Improved sentiment towards financials spread to Europe on Wednesday, with HSBC Holdings shares up 4.9% in London, BNP Paribas shares up 8.9% in Paris and Santander shares up 4.9% in Madrid.
"Efforts are being taken by U.S., U.K. and other authorities to provide insurance against loans, which they hope will encourage increased lending," noted Darren Winder, head of macro and strategy research at Cazenove.
"The difficulty at the moment is that people generally have relatively little confidence in whether these measures will work," he noted. "There is an air of skepticism around, and that is why we are seeing markets move largish amounts on a daily basis."
"I think it will be some considerable time before we know whether the banking system has been stabilized to the point where lending growth has resumed to the real economy and has resulted in rising levels of economic activity," Winder added.
U.S. President Barack Obama attempted to address worries about the future of the U.S. economy on Tuesday when he said that the U.S. will emerge from the recession "stronger than before." Read more on Obama speech.
Henkel, Deutsche Boerse up
Shares of German consumer-products group Henkel jumped 11% after it said that fourth-quarter net income more than tripled to 863 million euros from 244 million euros a year earlier, boosted by the sale of its Ecolab operation.
Henkel said that it expects difficult market conditions to continue through 2009 but expects to outperform its markets in terms of organic growth.
German stock-exchange operator Deutsche Boerse climbed 5.9% after reporting an 18% drop in fourth-quarter net income to 222.4 million euros ($286.1 million). That still was enough to beat market expectations.
Chocolate maker Cadbury climbed 2.7%. Its fiscal-year net income declined to 366 million pounds from 407 million pounds a year earlier but came in ahead of analyst forecasts. Sales rose to 5.4 billion pounds from 4.7 billion pounds.
Rhodia shares climbed 11%. The French chemicals specialist reported a fourth-quarter net loss of 28 million euros, broadly in line with analyst forecasts. A year earlier, it reported a profit of 22 million euros. It also unveiled 150 million euros of cost cutting measures.
Shares of Royal Caribbean Cruises climbed 2.4% in Oslo while Carnival shares rose 7.6% in London after Credit Suisse upgraded both cruise operators to outperform from neutral.
