BLBG; European Stocks Rise for Sixth Day as BP Surges
European stocks climbed for a sixth day as Alcoa Inc. began the U.S. earnings season with profit that beat estimates and BP Plc gained. U.S. index futures advanced, while Asian shares fell.
BP increased 4.5 percent after installing a new cap on its leaking oil well in the Gulf of Mexico and as Abu Dhabi said it’s considering making an investment in the company. Alcoa, the largest U.S. aluminum producer, rose 4 percent in pre-market New York trading. Bayerische Motoren Werke AG jumped 6.6 percent after raising its forecasts.
The Stoxx Europe 600 Index advanced 1.8 percent to 255.62 at 1:06 p.m. in London, erasing this year’s losses. The measure has risen 8 percent over the past six days amid easing concern about the economic recovery and speculation that the selloff in equities since April has overshot the outlook for company profits. The gauge remains 6.1 percent below this year’s high.
Earnings “forecasts look too low and we expect a strong majority of companies to beat their numbers,” said Graham Bishop, the London-based head of pan-European equity strategy at Royal Bank of Scotland Group Plc. “We already know a great deal about the performance of the global economy through the second quarter. Consensus economic forecasts have actually been revised materially higher.”
U.S., Asian Shares
Standard & Poor’s 500 Index futures rose 0.6 percent today, indicating the U.S. gauge will advance for a sixth day. The MSCI Asia Pacific Index lost 0.3 percent as China reaffirmed a commitment to lending curbs and India’s Infosys Technologies Ltd. reported worse-than-estimated profit.
Portugal’s PSI-20 Index was the second-weakest western European market today as Moody’s Investors Service cut the nation’s credit rating by two notches to A1 because of a growing debt burden and weak economic growth prospects. The gauge gained 0.4 percent, while the U.K.’s FTSE 100 and France’s CAC 40 rallied 1.5 percent and Germany’s DAX rose 1.4 percent.
Greece’s ASE Index surged 2.4 percent as the nation sold 1.63 billion euros ($2.1 billion) of 26-week Treasury bills at a rate below the 5 percent charged by the European Union for its bailout package, easing concern the country faces punitive costs to borrow.
In Germany, the ZEW Center for European Economic Research said its index of investor and analyst expectations, which aims to predict developments six months ahead, fell for a third month to a 15-month low of 21.2 in July from 28.7 in June. Economists had forecast a drop to 25.3, according to the median of 34 forecasts in a Bloomberg News survey.
BP Gains
BP advanced 4.5 percent to 416.9 pence, extending yesterday’s 9.4 percent jump. The oil company installed a new cap on its leaking Gulf of Mexico well and will start testing today whether this will stop the gusher while work continues on a permanent plug. Separately, the Financial Times reported that BP expects to be able to write off the oil-spill cleanup costs against taxes, without saying where it got its information.
Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan said the emirate is considering making an investment in BP.
“We are still thinking about it,” he said in an interview in Abu Dhabi today, when asked about potentially buying a stake in the London-based oil producer. “We are looking across the board. We have been partners with BP for years.”
U.S. Earnings
Alcoa climbed 4 percent to $11.30 in New York as the aluminum producer reported second-quarter profit that topped analysts’ projections as higher metal prices boosted sales.
Earnings from continuing operations were 13 cents a share, exceeding the 11-cent average estimate of 17 analysts surveyed by Bloomberg. Net income of $136 million, or 13 cents a share, compared with a net loss of $454 million, or 47 cents, a year earlier, New York-based Alcoa said late yesterday.
Profits for S&P 500 companies are projected to have increased 34 percent in the second quarter and by the same amount in 2010, according to analysts’ estimates compiled by Bloomberg. Intel Corp., the biggest maker of semiconductors which reports quarterly earnings after the close of U.S. exchanges today, is among 23 companies in the index to announce results this week.
BMW rallied 7.3 percent to 41.73 euros, leading a gauge of auto stocks to the biggest gain among 19 industry groups in the Stoxx 600. The world’s biggest maker of luxury cars forecast 2010 sales volumes will rise by about 10 percent to more than 1.4 million units, with a full-year profit margin of more than 5 percent expected for the automobiles segment.
Peugeot SA climbed 3.6 percent to 23.98 euros and Volkswagen AG preferred shares gained 4.3 percent to 76.38 euros. JPMorgan Chase & Co. raised its price estimate on the French carmaker by 3 percent to 34 euros and on the German automaker by 4 percent to 78 euros, saying increased demand and “attractive valuations” favor the industry, according to a report dated today.
Unilever, the world’s second-largest maker of consumer products, gained 2.7 percent to 1,893 pence and British American Tobacco Plc advanced 2.2 percent to 2,268 pence as Goldman Sachs Group Inc. upgraded both companies to “buy” from “neutral.”
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
