MW: Europe stocks rally on first trading day of 2012
Sunways soars over 20% on Chinese bid
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Thin trading conditions and a better-than-expected purchasing-managers index out of Germany lifted European stock markets on the first day of trading for the near year.
Adding to earlier gains, the Stoxx Europe 600 index XX:SXXP +0.91% rose 0.7% to 246.35 on Monday. The index closed out 2011 with an 11.3% loss, the first yearly fall in three years and the worst annual performance since 2008.
The push higher was led by the German DAX 30 index DX:DAX +2.49% , up 2.1% to 6,020.97. A wide swath of stocks contributed to that gain, with heavyweight engineering group Siemens AG DE:SIE +2.59% SI +0.22% and drug group Bayer AG DE:BAYN +2.76% up each up 2% and chemicals group BASF SE DE:BAS +2.83% up 2.1%. Insurer Allianz SE DE:ALV +5.07% rose 4%.
German stocks, in particular, were boosted after the Markit/BME Germany Manufacturing purchasing-managers index rose to 48.4 in December from 47.9 in November. That final number was up from an earlier estimate of 48.1, and better than the consensus estimate of 48.1 compiled by FactSet Research.
“German PMI were marginally stronger than expected, and anything better-than-expected in current market sentiment will lead risk appetite back in markets,” said Christian Tegllund Blaabjerg, chief economist at FIH Erhvervsbank, in emailed comments. And “with low liquidity you have a stronger reaction than usual in equity markets.”
Meanwhile, the Markit euro-zone purchasing-managers index rose in December to 46.9 from a 28-month low of 46.4 in November, confirming a previous estimate. Both readings, however, were below the 50 level, indicating a further contraction in manufacturing activity. Read more about euro-zone PMI data.
Quiet trading
The absence of liquidity in markets for Monday reflects the absence of the U.K., which is closed for a bank holiday, and the U.S. markets, which are shut in observance of the New Year holiday.
But once markets return in full on Tuesday, Blaabjerg said, there really isn’t much pointing to “a light at the end of the tunnel” for Europe, and European stocks could face renewed pressure.
“The U.S., however, is a whole different case. I am betting my silver dollar on the U.S. growth outlook in 2012 -- the housing market has bottomed out, and once this happens the U.S. is coming back strongly,” he said.
Bond yields steady
Bond yields were largely steady across the board, with the yield on Italy’s 10-year government bond IT:10YR_ITA -0.07% up 2 basis points to 6.88%. The Italy FTSE MIB index XX:FTSEMIB +2.22% rose nearly 2% to 15,388.95.
The market was led by a 4.3% rise for insurer Assicurazioni Generali SpA IT:G +4.30% and a 2.7% rise for bank Intesa Sanpaolo SpA IT:ISP +2.71% .
The French CAC 40 index FR:PX1 +1.48% rose 1.1% to 3,196.02, with BNP Paribas SA FR:BNP +1.57% up 1.7% and heavyweight energy group Total SA TOT +0.12% FR:FP +0.98% up 1%.
Spanish and Portugal stocks were also not left out of gains, with the IBEX 35 index XX:IBEX +1.67% up 1.3% to 8,684 and the Portugal PSI 20 index PT:PSI20 +2.00% up 1% to 5,546.73. Banks were the main gainers for those indexes.
Yields for the 10-year Spanish bond ES:10YR_ESP -0.09% fell 3 basis points to 5.06%.
The alternative energy sector was active on Monday. Away from the Stoxx 600, shares of Sunways AG DE:SWW +28.24% shares soared 23% after the company said that China-based LDK Solar Co. LDK -0.96% will buy 33% of the German solar-panel maker and then offer to buy the rest of the shares for 1.90 euros each.
Shares of Vestas Wind Systems AS DE:VWS +6.66% rose 8%.
On the downside, shares of Storebrand ASA NO:STB -4.44% fell 3.8%, the top decliner in the Stoxx 600. Storebrand and other Norwegian insurers have reportedly received thousands of claims in the wake of storm Dagmar that swept over Sweden, Finland and Norway with hurricane-strength winds on Dec. 26 and Dec. 27.
