BLBG:European Stocks Rally As Draghi Pledges To Preserve Euro
European stocks climbed, halting a four-day selloff, after European Central Bank President Mario Draghi said policy makers will do whatever it takes to preserve the euro. U.S. index futures and Asian shares also advanced.
Banco Santander SA (SAN) surged 6.5 percent and UniCredit SpA jumped 7.3 percent, leading a rally in bank stocks. Unilever (UNA) gained 5 percent after sales beat analyst estimates. France Telecom (FTE) SA rose 4.2 percent after the company also reported results that topped projections.
The Stoxx Europe 600 Index (SXXP) jumped 1.8 percent to 254.83 at 12:58 p.m. in London, the biggest advance this month, after swinging between gains and losses earlier. Standard & Poor’s 500 Index futures expiring in September surged 1.1 percent, while the MSCI Asia Pacific Index climbed 0.9 percent, snapping a four-day decline.
“When it all comes together, policy makers don’t want the euro to break up and ultimately will take the necessary decisions to ensure that it keeps together,” said Kevin Lilley, a European fund manager at Old Mutual Asset Managers U.K. in London, which has about 4 billion pounds ($6.2 billion) in assets under management. “The market has already been pricing in some element of a break up.”
Stocks surged after Draghi signaled central bank officials are prepared to do whatever is needed to ensure the euro’s survival and act on surging bond yields. His comments came as Spanish policy makers called on the central bank to fight a renewed bout of financial turmoil that pushed the yields on Spain’s bonds to euro-area records this week.
“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Draghi said during a speech in London today. “And believe me, it will be enough.”
Bonds Advance
Spanish and Italian bonds advanced for a second day. Spain’s two-year yields fell the most this month after Draghi said addressing high yields on sovereign debt was within the central bank’s mandate. German bunds declined as his comments damped demand for the region’s safest assets.
In the U.S., data today may show orders for durable goods cooled in June. The projected 0.3 percent gain in bookings for goods meant to last at least three years would follow a 1.3 percent increase in May, according to the median economist forecast in Bloomberg survey. Separate figures may show claims for jobless benefits remained elevated and contracts to purchase previously owned houses rose at a slower pace.
Santander, which today reported a 93 percent slump in second-quarter profit, rallied 6.5 percent to 4.34 euros. Banco Bilbao Vizcaya Argentaria, Spain’s largest bank, climbed 5 percent to 4.66 euros. UniCredit (UCG), Italy’s biggest lender, surged 7.3 percent to 2.54 euros in Milan.
Unilever Gains
Unilever rose 5 percent to 2,247 pence, the highest since at least September 1988, after the world’s second-biggest consumer-goods maker announced a 5.8 percent gain in underlying revenue in the second quarter, boosted by the growth of personal-care products in Asia. That topped the average estimate of 32 analysts surveyed by the company for a 4.8 percent increase.
France Telecom climbed 4.2 percent to 10.70 euros after the country’s largest phone company reported a 3.2 percent decline in first-half revenue to 21.8 billion euros as price cuts helped slow customer defections. That compares with the 21.7 billion- euro average analyst estimate. Earnings before interest, taxes, depreciation and amortization of 7 billion euros also met estimates.
ABB Ltd. (ABBN) gained 4.3 percent to 16.47 Swiss francs after the maker of power-transmission equipment said it’s more confident about its short-term outlook as orders increased at its power and automation businesses in China in recent months and it experienced “sustained order growth” in the U.S. Net income for the second quarter still fell 27 percent to $656 million, missing analyst estimates.
Telefonica Dividend
Telefonica SA (TEF) declined 0.6 percent to 8.61 euros. The shares had tumbled as much as 8.7 percent after Europe’s biggest phone company suspended its 1.50 euro-a-share dividend for 2012 and reduced a revenue forecast.
The company also slashed total compensation for its top managers by 30 percent and board members agreed to take a 20 percent pay cut. Telefonica reported a 6.6 percent drop in second-quarter operating income to 5.35 billion euros, falling short of the average analyst estimate of 5.28 billion euros.
Alcatel-Lucent (ALU) sank 7.9 percent to 80.6 euro cents after France’s largest network-equipment supplier said it will cut 5,000 jobs as part of a plan to save an additional 750 million euros. The company’s net loss, its first in five quarters, was 254 million euros, or 11 cents a share, compared with net income of 43 million euros, or 2 cents, a year earlier.
Volkswagen Retreats
Volkswagen AG (VOW) retreated 2.5 percent to 130.30 euros as Europe’s biggest carmaker reported a 3.4 percent rise in second- quarter operating profit to 3.28 billion euros, slower than the first quarter’s 10 percent increase. Second-quarter sales gains also slowed to 19 percent from 26 percent in the first quarter.
Siemens AG (SIE) lost 1.6 percent to 66.22 euros after it reported third-quarter net income from continuing operations of 1.23 billion euros and warned that reaching its full-year earnings goal has become harder. That compares with the average estimate of 1.4 billion euros, according to a Bloomberg survey.
Royal Dutch Shell Plc (RDSA) slid 2.7 percent to 2,128 pence as Europe’s biggest oil company today reported a 13 percent drop in second-quarter profit, excluding one-time items and inventory changes, to $5.7 billion. That missed the average analyst estimate of $6.3 billion.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
