BLBG: European Stocks Rebound From Six-Week Low; Porsche, Compass Lead Advance
European stocks rebounded from a six-week low as Ireland’s government prepared to unveil a four- year deficit-cutting plan. U.S. stock-index futures climbed while Asian shares retreated.
Porsche SE paced advancing shares, climbing 4.9 percent after the carmaker’s operating profit increased more than sevenfold in the first quarter. Compass Group Plc rose 4.6 percent after reporting earnings that topped estimates. Bank of Ireland Plc plunged 24 percent amid speculation the Dublin-based lender may end up in majority state control.
The Stoxx Europe 600 Index climbed 0.7 percent to 265.47 at 1:36 p.m. in London. The gauge sank to the lowest level since Oct. 12 yesterday on mounting concern the sovereign-debt crisis will spread from Ireland to southern Europe and as North Korea fired artillery shells into South Korea.
“What’s going on regarding the peripheral European countries is impacting sentiment, but that is presenting valuation opportunities,” said Kevin Lilley, who helps oversee about $2 billion at Royal London Asset Management. “I am not comfortable with the short term volatility but I stick with the view that global GDP growth remains pretty robust. There is still substantial upside to equity markets.”
Irish Budget
Ireland’s Finance Minister Brian Lenihan will today lay out a deficit-cutting program as the government races to finish talks on aid with the International Monetary Fund and the European Union. The country’s debt rating was lowered two steps by Standard & Poor’s late yesterday, with a negative outlook.
Prime Minister Brian Cowen said while talks were still ongoing with the EU and the IMF over the final amount of the bank bailout, “an amount in the order of” 85 billion euros ($113 billion) had been discussed. He was speaking in parliament in Dublin today.
Standard & Poor’s 500 Index futures climbed 0.8 percent, indicating the U.S. gauge will rebound before tomorrow’s Thanksgiving holiday. The MSCI Asia Pacific Index fell 0.8 percent, paring an earlier drop of as much as 1.3 percent as the United Nations Commander Walter Sharp proposed talks with North Korea over its shelling of a South Korean island.
European stocks and U.S. futures extended gains after a report showed applications for unemployment benefits in the U.S. fell more than forecast last week to the lowest level since July 2008, reinforcing evidence the labor market is healing.
Porsche, Compass Gain
Porsche jumped 4.9 percent to 55.69 euros after the maker of the 911 sports car said earnings before interest and taxes surged to 395 million euros between August and October compared with 52 million euros a year earlier. Sales climbed 80 percent to 2.1 billion euros.
Compass rose 4.6 percent to 552 pence after the world’s largest catering company said full-year profit rose 15 percent, beating analysts’ estimates, as it exited some unprofitable contracts and cut costs at acquired businesses.
Provident Financial Plc, the U.K.’s biggest subprime lender, rallied 7.8 percent to 835.5 pence after saying the government’s spending cuts will have a “modest” effect on its customers.
BP Plc gained 1.2 percent to 434 pence after the company said it made a “significant’ gas discovery in Egypt’s West Nile Delta area.
Johnson Matthey Plc rose 1.9 percent to 1,875 pence after the maker of a third of all autocatalysts reported a 33 percent increase in first-half profit to 104.7 million pounds ($165 million) on improved demand from emerging markets. The company also said it expects results in the second half to be similar.
Irish Banks
Bank of Ireland sank 24 percent to 22.9 euro cents, extending this week’s slump to 53 percent. Two people familiar with the situation said the lender may end up in majority state control as the government injects more capital into the bank.
Ireland will seek to raise the core tier 1 capital levels of its banks to between 10.5 percent and 12 percent, the people said. Shares of Allied Irish Banks Plc dropped 13 percent to 28.8 euro cents.
SAP AG slid 1.3 percent to 35.74 euros after the software maker was ordered to pay $1.3 billion to rival Oracle Corp. for copyright infringement by a now-defunct software maintenance unit. The jury yesterday awarded the damages after an 11-day trial in federal court in Oakland, California.
Agfa-Gevaert NV tumbled 15 percent to 3.61 euros after Europe’s largest maker of prepress products reported profit that missed analyst estimates as its specialty film business turned unprofitable.
