MW: Europe stocks rise ahead of Italy election results
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — An overnight rally in Asian markets inspired European investors to take on more risk on Monday, and Italian stocks advanced ahead of the first exit polls from the country’s general election due in the afternoon.
The Stoxx Europe 600 index XX:SXXP +0.25% gained 0.3% to 289.55, on track for a second straight day of gains.
The index was, however, flat for the month of February, as worries over the elections in Italy and concerns that the U.S. Federal Reserve is mulling a quantitative-easing exit strategy kept investors from continuing the early 2013-rally. For the year so far, the Stoxx 600 is still up 3.5%.
Monday’s positive moves added to a 1.3% gain from Friday, when investors cheered upbeat German data.
“Leading up to the Italian election many investors were also closing out their short positions last week and there is a continuation of that today,” said Predrag Dukic, senior equity sales trader at CM Capital Markets in Madrid.
“If the rally is to continue all depends on what we see today. Markets are pricing in a more stable center-left leaning and euro-friendly coalition and should we see a surprise we could obviously see a very different afternoon,” he said.
Italy’s FTSE MIB index XX:FTSEMIB +2.08% rallied 2.1% to 16,575.87, with shares of UniCredit SpA IT:UCG +3.95% 4% higher.
Italians were rounding up the last day of the two-day general elections, with the first exit polls expected after the polling stations close at 9 a.m. Eastern time.
Both Italian and European stock and bond markets have been shaky in weeks leading up to the elections, worried that a strong result from Silvio Berlusconi or a fragmented government would derail the country from its current reformist drive.
It is illegal to publish polls in the final weeks leading up to an election in Italy, but news reports have suggested that the center-left Democratic Party, led by Pier Luigi Bersani, will win the most votes in the lower house of parliament. The first exit polls are expected in the afternoon. See: Can Silvio Berlusconi dent the global stock rally?
Among other notable movers in Europe, shares of Nokia Corp. FI:NOK1V +1.97% NOK +0.80% added 2.3%, as the handset maker launched new Windows smartphones in the midrange and lower price segments in an effort to boost sales. See: Nokia launches cheaper Lumia smartphones.
Shares of Reckitt Benckiser PLC UK:RB -3.65% on the other hand, slumped 3.6% after the consumer-goods firm said it was disappointed with the U.S. Food and Drug Administration’s decision to deny a citizen’s petition filed by the RB Pharmaceuticals business. See: Reckitt Benckiser disappointed over FDA RB denial.
For the broader European stock markets, most indexes started out on a strong footing, boosted by a positive trading session in Asia.
Japanese shares soared to the highest closing level since September 2008, following reports that Asian Development Bank chief Haruhiko Kuroda could be the country’s next central bank governor. See: Japan stocks stand out in mostly upbeat Asia.
Among other country-specific indexes, Germany’s DAX 30 index DX:DAX +2.19% jumped 2.4% to 7,843.26. Shares of K+S AG DE:SDF +3.07% gained 3.4%, after Citigroup lifted the chemicals firm to buy from neutral.
Shares of Volkswagen AG DE:VOW3 +0.22% added 0.2%, mostly shaking of reports that the first quarter will be weaker than last year. See: Report: Volkswagen CFO sees sluggish start to year
France’s CAC 40 index FR:PX1 +1.66% rose 1.9% to 3,774.91, with shares of Vivendi SA FR:VIV +3.50% up 3.9%. French TV BFM reported that private-equity owned French cable operator Numericable is preparing a cash offer for Vivendi’s telecom operator SFR. A representative from Vivendi said that “SFR is not for sale”. See: Numericable readies offer for Vivendi SFR: report.
The U.K.’s FTSE 100 index UK:UKX +0.52% gained 0.6% to 6,373.26, even after Moody’s Investors Service late Friday slashed the country’s credit rating to Aa1 from Aaa. See: U.K. ratings downgrade weighs on pound.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
