European stocks gained, rebounding from a five-week low for the Stoxx Europe 600 Index, as an unexpected decline in the U.S. jobless rate reassured investors about the health of the world’s largest economy.
BHP Billiton Ltd., Rio Tinto Group and Xstrata Plc increased after the Australian government scaled back a proposed tax on mining companies. Dana Petroleum Plc jumped 20 percent after the Scottish oil explorer received a takeover approach from Korea National Oil Corp. Genmab A/S surged 50 percent after a revised agreement with partner GlaxoSmithKline Plc reduced the risk of a new share sale.
The Stoxx 600 added 0.9 percent to 239.34 at 2:48 p.m. in London. The gauge has declined 12 percent from this year’s high on April 15, pushing its valuation to 11 times reported earnings, the lowest level since 2008, according to Bloomberg data. The index is heading for a weekly decline of 3.6 percent as concern deepens that the world economy is slowing.
“Financial markets have endured a torrid couple of months, but the level of spill-over into the real economy looks limited,” Ian Richards, a strategist at Royal Bank of Scotland Group Plc in London, wrote in a report. “We think we face another reporting season characterized by a strong beat ratio, and generally markets respond to that sort of newsflow.”
Jobless Rate
The U.S. jobless rate fell to 9.5 percent in June from 9.7 percent the previous month as the labor force shrank, Labor Department figures showed today. Payrolls declined by 125,000 as the government cut 225,000 temporary workers conducting the 2010 census. Employment at companies rose 83,000.
BHP Billiton, the world’s biggest mining company, rose 2.9 percent to 1,744 pence in London trading. Rio Tinto gained 2.6 percent to 2,981 pence and Xstrata added 4.7 percent to 885.1 pence. Australia exempted most commodities from a proposed mining tax, raised the threshold and cut the levy to 30 percent on coal and iron ore earnings, compared with a previous plan to collect 40 percent of all resource profits. The revamped tax will apply from July 2012.
Dana Petroleum jumped 20 percent to 1,418 pence. The company said it received a “very preliminary approach which may or may not lead to an offer.” KNOC confirmed it’s in discussions regarding a possible cash offer for Dana.
Genmab, Glaxo
Genmab soared 50 percent to 61.25 kroner after the Danish biotechnology company whose chief executive officer unexpectedly resigned in June amended its agreement with Glaxo on its Arzerra drug. In exchange for lower milestone payments and royalties, Genmab will get an upfront payment of 90 million pounds ($136 million) and will spend less to develop the antibody, which it plans to use as a treatment for cancer and autoimmune diseases.
A gauge of automakers in the Stoxx 600 rose 1.4 percent as Daimler AG and Bayerische Motoren Werke AG reported increased U.S. sales.
Daimler climbed 1.1 percent to 40.85 euros after its Mercedes-Benz unit reported a 25 percent jump in June car sales to 18,997 compared with a year earlier. BMW rose 1 percent to 38.57 euros as the biggest maker of luxury cars reported that it sold 23,331 vehicles in the U.S. in June, a 12 percent increase compared with the same month of 2009.
Deutsche Boerse AG, the operator of the Frankfurt stock exchange, increased 1.5 percent to 45.68 euros. Morgan Stanley upgraded the stock to “overweight” from “equal weight,” saying that exchanges are “starting to look more attractive given lower balance sheet risks compared with banks and strong, volatility-driven volumes.”
ThyssenKrupp Upgrade
ThyssenKrupp AG climbed 3.4 percent to 20.49 euros after Goldman Sachs Group Inc. analysts upgraded Germany’s largest steelmaker to “buy” from “neutral”.
“Recent volatility in the equity markets has driven steel valuations to low levels,” analysts led by Peter Mallin-Jones wrote in a note to clients. ThyssenKrupp has “an attractive growth profile and end-market exposures.”
Sanofi-Aventis SA fell 2 percent to 47.27 euros after five people with knowledge of the situation said France’s largest drugmaker is planning a major acquisition in the U.S. Chief Executive Officer Chris Viehbacher briefed the board on the transaction at a special meeting this week, according to two of the people.
UBS AG analysts said that Sanofi’s priority should be building a biotech business rather than expanding into the U.S. The brokerage left its “neutral” rating unchanged.
To contact the reporter on this story: Will Hadfield in London at whadfield@bloomberg.net
