BLBG: Europe Stocks Rebound as Investors Speculate on Further Stimulus
European stocks rebounded from their lowest level in almost three weeks amid investor optimism that worse-than-forecast inflation data will bolster the case for further European Central Bank stimulus measures.
The Stoxx Europe 600 Index added 0.5 percent to 333.19 at 10:04 a.m. in London. The gauge is still down 5.1 percent from an almost seven-year high reached last month, amid a slump in oil-and-gas companies and growing concern over Greece as Prime Minister Antonis Samaras said this month’s election could lead to the nation exiting the euro area. The ASE Index fell 3.1 percent today.
“We are once again in ‘bad news is good news’ territory, with investors hoping that the likely poor CPI data will spur earlier action from the ECB,” Alex Neil, head of equity and derivatives trading at EFG Bank in Geneva, said before the report was released. “It’s reassuring to see the markets finally catch up a bit after a three-week bashing. But we’re entering a precarious few weeks for euro zone politics, which I expect will offset any short-term inflationary revival hopes.”
Data today showed the inflation rate in the euro area fell below zero for the first time in more than five years, bolstering the case for more European Central Bank stimulus. Prices (ECCPEST) dropped 0.2 percent in December, the European Union’s statistics office said. Economists had predicted a decline of 0.1 percent. Unemployment held at 11.5 percent in November, Eurostat said in a separate report.
U.S. equity-index futures climbed 0.4 percent today, signaling gains after five days of losses, before the release of minutes from December’s Federal Reserve policy meeting.
Retailers Advance
Among stocks moving on corporate news, U.K. retailers gained after J Sainsbury Plc reported a slowing decline in quarterly sales, beating analyst forecasts. The U.K.’s third-largest supermarket chain rose 0.4 percent, after earlier adding as much as 4.9 percent. Wm Morrison Supermarkets Plc climbed 2 percent, Tesco Plc increased 1.9 percent, and Marks & Spencer Group Plc added 2.9 percent.
Aggreko Plc increased 4 percent after saying it signed a new two-year diesel-fuel power contract in Argentina.
A measure of energy stocks was among the worst performers of the 19 industry groups on the Stoxx 600 as oil fell for a fifth day amid speculation data on U.S. supplies today will fuel concern over a global gut. Statoil ASA was among the biggest contributors to the decline, falling 1.6 percent.
The volume of Stoxx 600 shares changing hands today was 14 percent greater than the 30-day average, data compiled by Bloomberg show.
To contact the reporters on this story: Alan Soughley in Frankfurt at asoughley@bloomberg.net; Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net
To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net Alan Soughley
