MW: European shares gains as China signals confidence
Man Group shares climb after results but Richemont falls
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares Thursday extended sharp gains made in the previous session, with miners and insurance companies advancing after China denied that it's considering reducing European government bond holdings.
The Stoxx Europe 600 index (ST:SXXP 242.30, +4.56, +1.92%) rose 1.9% to 242.25, adding to a 2.4% gain made Wednesday and bringing its weekly gains to 2.1%.
"Reassuring words from China that it remained a long-term investor in Europe, despite the current problems, helped to boost sentiment," said strategists at RBC Capital Markets.
China State Administration of Foreign Exchange said Thursday that media reports that it is considering selling some of its holdings of euro-zone bonds are "groundless." See related story.
The statement appears to counter a Financial Times report Wednesday that said the agency was discussing plans to diversify some of its estimated $630 billion in bonds issued by euro-zone member countries. It holds the bonds as part of a $2.4 trillion forex stockpile.
The euro (CUR_EURUSD 1.2270, +0.0114, +0.9378%) rose against the dollar, trading up 0.8% at $1.2278, which in turn helped support commodity futures and the mining sector.
Rio Tinto (UK:RIO 3,166, +101.50, +3.31%) (RTP 45.96, +2.63, +6.07%) shares climbed 3.7%, BHP Billiton (UK:BLT 1,919, +61.00, +3.28%) (BHP 65.79, +3.62, +5.82%) shares were up 3.5% and Xstrata (UK:XTA 997.80, +25.50, +2.62%) rose 2.9%.
On the regional level, the German DAX index (DX:DAX 5,889, +131.31, +2.28%) climbed 2.2% to 5,886.63, the French CAC-40 index (FR:PX1 3,478, +69.04, +2.03%) rose 1.9% to 3,473.90 and the U.K. FTSE 100 index (UK:UKX 5,131, +93.07, +1.85%) rose 1.8% to 5,127.77.
U.S. stock futures were pointing to strong gains on Wall Street. Dow Jones Industrial Average futures were up 188 points.
Insurers, which are large holders of European government bonds, were strong as well, with Axa (FR:CS 13.36, +0.63, +4.91%) shares up 5.5% and Aviva (UK:AV. 317.50, +17.60, +5.87%) shares up 6%.
Ageas (BE:AGS 2.05, +0.18, +9.70%) , the Brussels insurer, jumped 9.2% after it said that given continuing "uncertainties in the financial markets," it has further reduced its exposure to Southern Europe in its investment portfolio.
At May 21, the insurer's bond exposure to those countries stands at 9.1 billion euros, with the largest portion 3.8 billion euros of Italian bonds. It's taking a 55 million to 65 million euro charge on the move.
Prudential (UK:PRU 541.00, +28.50, +5.56%) (PUK 15.68, +1.18, +8.14%) jumped 5.3% following reports that as many as 20% of the U.K. insurer's shareholders are ready to oppose its $35.5 billion takeover of American International Group's Asian business. Read more on Prudential.
Oil giant BP (UK:BP. 509.50, +17.50, +3.56%) (BP 44.37, +1.96, +4.62%) climbed 3.4%. The oil giant began its so-called top kill of its leaking Gulf of Mexico oil well Wednesday. Read more on BP.
The firm was upped to outperform from peer by Oppenheimer as the broker said the upside potential is significantly greater than any further downside risk from the oil spill.
Carlos Slim, the world's richest man, is considering buying a stake in Portugal Telecom following speculation Telefonica (ES:TEF 15.32, +0.23, +1.52%) (TEF 54.68, -1.98, -3.49%) , up 1.8%, may make a bid for the company, according to the newspaper Diario Economico.
The firm holds 68% of Dansk Supermarked, which is selling its U.K. unit of Netto to Wal-Mart Stores' (WMT 50.02, -0.26, -0.52%) Asda division for 778 million pounds ($1.13 billion) in cash and assumed debt. See Wal-Mart story.
U.K. hedge-fund manager Man Group (UK:EMG 230.20, +14.90, +6.92%) , up 6.9%, said that its net profit for the year ended March 31 slipped 12% after both the management and performance fees it received from clients dropped sharply.
Still, the group estimated its funds under management on May 25 at $39 billion, similar to the $39.4 billion it recorded at the end of March. Read more on Man Group.
Richemont (CH:CFR 37.92, -0.71, -1.84%) couldn't join in the broader market advance, trading down 1.7%.
The Swiss luxury-goods group reported that for the year ended March 31, net income fell 44% to 600 million euros ($737 million), below analyst forecasts for a €716 million profit. Sales fell 4.5% to €5.18 billion.
