BLBG: European Stocks, U.S. Futures Advance; UBS, RBS, Banks Climb
European stocks rose for the first time in five days and U.S. futures gained after UBS AG replaced its chief executive officer and the U.K. government extended guarantees on bank assets.
UBS added 10 percent as Switzerland’s biggest bank hired former Credit Suisse Group AG CEO Oswald Gruebel to restore confidence. Royal Bank of Scotland Group Plc surged 23 percent on plans to put 325 billion pounds ($462 billion) of assets into a government insurance program and dispose of 20 percent of its remaining holdings after posting the biggest loss in U.K. history. Citigroup Inc. added 3.6 percent in Germany.
“The market is more confident that banks can stand on their own two feet,” said Thomas Schudel, a fund manager at Clariden Leu in Zurich, which has about $120 billion under management. “We could see a relief rally.”
Europe’s Dow Jones Stoxx 600 Index climbed 0.9 percent to 173.82 at 10:39 a.m. in London, rebounding from a six-year low. The Stoxx 600 has lost 12 percent this year as companies from Anglo American Plc to Cie. de Saint-Gobain SA indicated the recession is worsening and credit-market losses at financial firms reached $1.1 trillion.
The MSCI Asia Pacific Index declined 0.9 percent today, led by Advantest Corp. after the world’s biggest maker of memory-chip testers forecast a loss.
Futures on the Standard & Poor’s 500 Index added 0.8 percent. Financial stocks in the S&P 500 yesterday dropped as much as 6.5 percent before paring losses and closing down 0.5 percent after regulators provided details of their plans to review bank balance sheets.
Bank Nationalization
U.S. banks also pared declines after Federal Reserve Chairman Ben S. Bernanke said that while the U.S. government may take “substantial” stakes in Citigroup Inc. and other banks, it doesn’t plan a full scale nationalization that wipes out stockholders.
UBS climbed 10 percent to 11.13 Swiss francs. The bank named Gruebel to replace Marcel Rohner, who is leaving the company immediately. German-born Gruebel, who returned Credit Suisse to profit after two years of losses at the start of the decade then retired in 2007, is UBS’s third CEO in less than two years. The bank has been plagued by more than $50 billion in writedowns from the global financial crisis, as well as a U.S. probe into whether it helped wealthy Americans evade taxes.
‘The Right Direction’
“What we see from UBS and RBS is setting the tone in the right direction,” said Philippe Gijsels, a Brussels-based senior structured-product strategist at Fortis Global Markets. “This market is looking at the financials and to governments for a resolution of the problems.”
RBS advanced 23 percent to 28.4 pence. The biggest bank controlled by the U.K. government reported a full-year loss of 24.1 billion pounds. That compares with the median estimate of a 25.9 billion pound loss in a Bloomberg survey of eight analysts.
RBS will pay a fee of 6.5 billion pounds in the form of preference shares for the insurance. The bank will be responsible for the first 19.5 billion pounds of losses on the insured assets. RBS will cover 10 percent of any additional losses, with the Treasury responsible for the rest. The Treasury will also buy 13 billion pounds of the preference shares.
Lloyds Banking Group Plc, which took over HBOS Plc last month, and Barclays Plc, the U.K.’s third-biggest bank, may also participate in the insurance program. Lloyds, which said it’s in talks with the U.K. Treasury on participating in the Government Asset Protection plan, gained 26 percent to 72.6 pence. Barclays added 11 percent to 116.8 pence.
Citigroup, JPMorgan
Citigroup, the New York-based bank bailed out by the U.S. for $52 billion, climbed 3.6 percent to $2.61. JPMorgan Chase & Co. added 2.3 percent to $22.22.
Allianz SE advanced 11 percent to 54.37 euros. Europe’s biggest insurer by market value reassured investors about the strength of its finances after posting a bigger-than-expected fourth-quarter loss on writedowns and the sale of its Dresdner Bank unit.
Chief Executive Officer Michael Diekmann said the insurer remains “financially stable” after he stopped the company’s eight-year foray into full-scale banking last year with the 5.1 billion-euro sale of unprofitable Dresdner Bank to Commerzbank AG. Allianz’s solvency ratio, a measure of its ability to absorb losses, is currently 159 percent, the company said today.
BASF SE advanced 6.1 percent to 22.35 euros. The world’s largest chemical producer will accelerate plant closures and eliminate at least 1,500 jobs after reporting its first quarterly loss for seven years.
National Express
National Express Group Plc increased 7 percent to 240.75 pence. The U.K.’s biggest long-distance coach operator said profit rose 13 percent last year as people switched from cars to public transport to save money in the recession.
Safran SA rallied 11 percent to 7.86 euros. The French partner in the biggest maker of commercial aircraft engines was raised to “buy” from “sell” at Goldman Sachs Group Inc. and added to the brokerage’s “conviction buy” list.
Dexia SA fell 7.2 percent to 1.60 euros. The world’s largest lender to local governments reported a record fourth-quarter loss on the sale of its U.S. bond insurance unit and provisions for declines in the value of mortgage-backed securities.
Deutsche Post AG slumped 9.7 percent to 7.55 euros. Europe’s biggest mail carrier reported a quarterly net loss, cut its dividend and forecast further volume declines for 2009.
Advantest tumbled 13 percent to 1,245 yen in Japan. The company said yesterday its net loss will probably amount to 78 billion yen ($797 million) in the year to March 31 and that it plans to cut a quarter of its workforce by March.
John Paulson
Distressed assets offer the best investment opportunities this year as the global recession deepens, billionaire hedge-fund manager John Paulson said. He’s focused in the equities markets on the utilities, consumer staples and pharmaceutical industries. Financial stocks remain risky, Paulson said.
The worst of the U.S. market’s losses may be over because fewer stocks are falling to 52-week lows, according to Bespoke Investment Group LLC.
Three-hundred and fifty companies that are listed on the New York Stock Exchange sank to their worst levels in a year on Feb. 23, when the S&P 500 tumbled to a 12-year low. That’s 71 percent fewer than on Nov. 20, the prior nadir during the bear market, according to data compiled by Bloomberg.
