BLBG: Europe Stocks Rise Above Record Close as BG Group Jumps on Deal
A surge in energy producers pushed European stocks above a record close.
The Stoxx Europe 600 Index added 0.3 percent at 10:45 a.m. in London, and climbed to as high as 405.73, surpassing the March 2000 closing level. BG Group Plc jumped 38 percent, the most ever, after Royal Dutch Shell Plc agreed to buy it for 47 billion pounds ($70 billion) in cash and stock.
The Stoxx 600 has climbed 18 percent this year, including its biggest jump in 10 weeks on Tuesday, on optimism central banks will support the economy. The European Central Bank began a quantitative-easing program that sparked a slump in the euro versus the dollar, helping exporters further.
“M&A is normally quite good for sentiment,” said Christian Zogg, who manages the equivalent of about $10 billion at LLB Asset Management AG in Vaduz, Liechtenstein. “QE is working for the moment. I hope that first-quarter results will start to show the benefit of a weaker currency. In my view, it should.”
Gains in BG pushed a gauge of oil and gas shares to its biggest advance since 2009. Galp Energia SGPS SA, BG’s partner in Brazilian fields, jumped 7.5 percent. That pushed Portugal’s PSI 20 Index to the biggest increase among western-European markets and its highest level since July. Shell fell 1.8 percent.
BG is poised for its highest close since July 2014. It rose the most in six years on Tuesday before takeover talks were reported, and bullish options volume increased on April 2.
Mining shares also advanced, with Anglo American Plc and BHP Billiton Ltd. gaining more than 2.1 percent.
SBM Compensation
Among stocks active on corporate news, SBM Offshore NV lost 6.7 percent after a report said the Dutch company agreed to compensate Petroleo Brasileiro SA for contract losses estimated at $1.7 billion.
An index of auto companies posted the worst drop among 19 industry groups. Bayerische Motoren Werke AG and PSA Peugeot Citroen slipped more than 1.8 percent after Kepler Cheuvreux SA downgraded the shares.
The DAX Index dropped 0.3 percent after data showed German factory orders unexpectedly fell for a second month in February.
Investors are also seeking clues on the timing of the Federal Reserve’s first interest-rate increase since 2006. The central bank publishes minutes from its latest meeting after European markets close. Fed Chair Janet Yellen has said she expects to raise rates this year, and that increases will be data dependent.
