BLBG; European Stocks Climb, Extending Biggest Weekly Gain in a Year
European stocks rose for a fourth day, extending the biggest weekly advance in a year, as confidence in the economic recovery strengthened. Asian shares gained, while U.S. index futures fluctuated.
Antofagasta Plc led a gauge of mining companies higher as metal prices rose and Citigroup Inc. recommended the copper producer. Infineon Technologies AG climbed on a report the semiconductor maker is close to selling its mobile-chip unit to Intel Corp. Michael Page International Plc rallied 2 percent after the U.K.’s second largest recruitment company reported increased profit.
The Stoxx Europe 600 Index advanced 0.5 percent to 249.83 at 12:40 p.m. in London, extending this week’s rally to 5.3 percent. The gauge is heading for the biggest weekly gain since July 17, 2009, as an increased growth forecast from the International Monetary Fund and lower-than-estimated U.S. jobless claims helped ease concern that the economy may be entering another recession.
“People have been overdoing their economic fears without looking at the underlying corporate stories,” said London-based Justin Urquhart Stewart, who helps oversee about $3.3 billion at 7 Investment Management. “There has been a realization that valuations are getting cheap. For the time being gains could have a bit further to go. Your risk now is being out of it.”
Stoxx 600 Valuation
The Stoxx 600 has fallen 8.2 percent from this year’s high in April, pushing the index’s valuation to about 11.5 times estimated earnings. That’s near the lowest level in more than a year, according to Bloomberg data.
The MSCI Asia Pacific Index rose 0.9 percent today after South Korea raised its benchmark interest rate for the first time since the global financial crisis. Futures on the S&P 500 rose less than 0.1 percent after the benchmark gauge for U.S. equities capped three days of gains yesterday.
Bank of Korea governor Kim Choong Soo boosted the seven-day repurchase rate to 2.25 percent from a record low 2 percent. An increase was forecast by just 4 of 14 economists surveyed by Bloomberg News. South Korea joins Malaysia, Taiwan and India in raising rates over the past 15 days, signaling Europe’s debt crisis won’t derail economic growth.
“Today’s move is a reflection of the central bank’s confidence in an economic recovery,” said Kim Jae Woo, an analyst at Samsung Securities Co.
Canada Jobs
A separate report in Canada showed job creation was almost five times more than economists expected in June, helping the economy to recover almost all of the job losses seen since 2008.
Antofagasta gained 3.9 percent to 884.5 pence as base metals rose and Citigroup raised its recommendation for the shares to “buy” from “hold.”
Rio Tinto Group, the world’s third-largest mining company, gained 3.2 percent to 3,172 pence, while Sweden’s Boliden AB increased 1.5 percent to 88.75 kronor.
Copper climbed in London for the fifth time in six days after a decline in stockpiles to a seven-month low stoked optimism demand is rising for the metal. Lead, nickel, and zinc also advanced on the London Metal Exchange.
Infineon rose 1 percent to 5.06 euros after Die Welt reported Europe’s second-largest chipmaker is close to selling its mobile-chip unit to Intel for as much as $1.4 billion.
The two sides have met several times in the past few weeks, though a contract has not yet been signed, the German newspaper said, citing unidentified bankers. The companies declined to comment, Die Welt said.
Michael Page
Michael Page gained 2 percent to 393.4 pence. The recruitment company said second-quarter profit rose 33 percent as business confidence levels improved, leading to higher “job churn.”
William Hill Plc rose 3 percent to 180.9 pence after BofA Merrill Lynch Global Research upgraded Britain’s largest bookmaker by number of outlets to “buy” from “neutral.” Analysts cited “continuing strong trends in online and an improvement in machines as key catalysts for the stock.”
Shares of Ladbrokes Plc, owner of 2,700 betting shops, climbed 2.7 percent to 136 pence.
GlaxoSmithKline Plc declined 2 percent to 1,119.5 pence as the company said its diabetes drug Avandia will undergo a safety review by European regulators. A similar analysis of the drug will be next week by the U.S. Food and Drug Administration, and a review by FDA staff on recent data gathered about Avandia is slated to be released today.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
