BLBG: Europe Stocks Rise as Ukraine Cease-Fire Steps Discussed
European stocks rose as Russia and Ukraine agreed on the steps needed for a truce, and a worse-than-forecast euro-zone purchasing managers’ index stoked speculation that the area’s central bank will increase stimulus. U.S. stock-index futures and Asian shares also climbed.
Equities with exposure to Russia advanced amid reports of the cease-fire discussions, with Nokian Renkaat (NRE1V) Oyj, Carlsberg A/S and Raiffeisen Bank International AG (RBI) among the biggest gainers. Danone increased 1.9 percent after appointing Emmanuel Faber as chief executive officer as it split the chairman’s dual roles. Hermes International SCA fell 5.1 percent after LVMH Moet Hennessy Louis Vuitton SA said it will distribute its stake in the company to its own shareholders.
The Stoxx Europe 600 Index added 0.8 percent to 345.49 at 11:38 a.m. in London, reaching its highest level since July 7 after the cease-fire reports. The gauge has rebounded 6.4 percent from a four-month low on Aug. 8 as European Central Bank President Mario Draghi signaled policy makers are ready to increase stimulus to fight low inflation. Standard & Poor’s 500 Index contracts increased 0.4 percent today, and the MSCI Asia Pacific Index gained 0.8 percent.
“It is the hoped-for stimulus at the ECB that is the main driver, with some additional help from a slight calming down on the geopolitical front,” Raimund Saxinger, who oversees $22 billion as a fund manager at Frankfurt-Trust Investment GmbH, said in a phone interview. “I think markets are aware that this can be reversed at any time, but that is what is contributing. The PMI probably increases the likelihood of stimulus as well.”
Cease-Fire Steps
Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko, largely agreed on steps to a cease-fire, Putin’s spokesman said, denying Ukraine’s assertion that the leaders reached agreement on a permanent truce.
A composite purchasing managers’ index for the euro area from Markit Economics fell to 52.5 in August from 53.8 in July, missing analyst forecasts of 52.8.
Central-bank stimulus has helped the Stoxx 600 rally about 61 percent from its low in September 2011. Since taking over in November of that year, Draghi has pledged to hold borrowing costs low and said in July 2012 he would do “whatever it takes” to save the euro.
In June of this year, the ECB took its deposit rate negative for the first time and cut its benchmark rate to a record low of 0.15 percent. The ECB meets to discuss monetary policy on Sept. 4.
National Benchmarks
National benchmark indexes gained in all of the 18 western-European markets today, except Iceland. France’s CAC 40 Index (CAC) increased 1.1 percent and Germany’s DAX Index rose 1.2 percent.
The U.K’.s FTSE 100 Index climbed 0.7 percent after a report showed services growth unexpectedly accelerated in August, countering a slowdown in manufacturing. Markit’s purchasing managers’ index rose to a 10-month high of 60.5 from 59.1 in July. Economists had forecast a drop to 58.5.
In the U.S., a report at 10 a.m. in Washington may show factory orders rose 11 percent in July, compared with a 1.1 percent gain in June, according to the median estimate of economists surveyed by Bloomberg News. The Federal Reserve releases its Beige Book review of regional economic conditions at 2 p.m.
Nokian Renkaat, the Nordic region’s largest tiremaker that got about 33 percent of its revenue from Russia in 2013, rose 6.2 percent to 25.80 euros. Carlsberg, Russia’s biggest brewer, added 3.1 percent to 533.50 kroner. Raiffeisen Bank International, which has relied on Russia as its biggest profit generator in the past three years, added 5.1 percent to 19.80 euros.
Danone Gains
Danone (BN) added 1.9 percent to 54.74 euros. The world’s biggest yogurt maker appointed Faber as CEO, while Franck Riboud remains chairman. The separation of the positions will help pave the way for “a smooth succession,” Paris-based Danone said late yesterday.
Ashtead Group Plc rose 2.7 percent to 1,013 pence after saying full-year results will be higher than previously forecast. The rental equipment company reported a 22 percent increase in first-quarter underlying rental revenue and said earnings before interest, taxes, depreciation and amortization jumped 30 percent to 209.9 million pounds ($345.7 million).
ING Groep NV climbed 1.9 percent to 10.74 euros. The biggest Dutch financial-services company said it will reduce its stake in a former U.S. insurance unit, Voya Financial Inc., by selling $1.18 billion in shares.
A gauge of bank-related stocks posted the second-biggest gain of the 19 industry groups on the Stoxx 600. Societe Generale SA added 2.9 percent to 39.49 euros. Commerzbank AG, Germany’s second biggest lender, climbed 1.9 percent to 11.84 euros.
LVMH added 2.9 percent to 136.90 euros. Hermes (RMS) dropped 5.1 percent to 249.30 euros, paring earlier losses of as much as 11 percent. The distribution of LVMH’s 23 percent holding -- worth about 5.7 billion euros ($7.5 billion) -- will end a four-year battle over its stake-building in the maker of Birkin bags.
To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net
To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Alan Soughley, Srinivasan Sivabalan
