European stocks rose to their highest level since April amid optimism the European Central Bank will win support from policy makers for a plan to ease the euro area’s debt crisis. U.S. index futures retreated, while Asian shares advanced.
Air France-KLM Group (AF) surged 10 percent after it posted a narrower second-quarter loss. Stagecoach Group Plc added 3.5 percent after the stock was upgraded at HSBC Holdings Plc. Ryanair Holdings Plc (RYA) declined 2.3 percent after saying fiscal first-quarter net income tumbled as fuel costs increased.
The benchmark Stoxx Europe 600 Index gained 0.9 percent to 262.12 at 9:01 a.m in London for a three-day rally of 4.7 percent, the largest in four weeks. Futures on the Standard & Poor’s 500 Index expiring in September declined 0.3 percent, while the MSCI Asia Pacific Index jumped 1.1 percent.
“I sort of got the feeling that we’ve been here before,” George Godber, who helps oversee $22 billion as a fund manager at Charles Stanley’s Matterley division in London, said in a Bloomberg Television interview. “We’ve actually got to see if they’re going to act now and that’s really what matters. It doesn’t have to be massive steps forward, it just has to be an outlining of a road map.”
ECB President Mario Draghi proposes using the euro area’s temporary rescue fund to buy government bonds on the primary market, while the ECB purchases securities on the secondary market to ensure the transmission of its record-low interest rates, two central bank officials said on July 27 on condition of anonymity.
Merkel-Hollande
European stocks rose for an eighth consecutive week last week as German Chancellor Angela Merkel and French President Francois Hollande joined Draghi in promising to do everything to protect the euro.
Draghi is seeking to build consensus among governments and central bankers for the plan to ease borrowing costs for Spain and Italy before Thursday’s interest-rate setting meeting. The ECB President needs to win over Bundesbank President Jens Weidmann, a critic of ECB bond purchases.
Luxembourg’s Prime Minister Jean-Claude Juncker, who also heads the group of euro-area finance ministers, said the region’s temporary rescue fund and the ECB are preparing act together to reduce borrowing costs, Sueddeutsche Zeitung reported, citing an interview.
A report from the European Commission today will probably confirm its index of household sentiment in the euro area declined to an almost three-year low of minus 21.6 in July, according to economists in a Bloomberg News survey.
Unemployment Rate
The jobless rate in the 17-nation currency zone probably climbed to 11.2 percent in June from an all-time high of 11.1 percent in May, economists in a separate poll predicted before the statistics office releases its report tomorrow.
In the U.S., the Federal Open Market Committee will announce a policy decision on Aug. 1 after a report last week showed the economy expanded at a slower pace in the second quarter, giving the central bank scope to add to stimulus measures to spur growth.
Air France surged 10 percent to 4.29 euros after posting a narrower second-quarter loss as a restructuring program helped to reduce operating costs. Europe’s second-largest airline by sales reported an operating loss of 66 million euros compared with 145 million euros a year earlier. That beat the average estimate for a 163 million-euro operating loss of three analysts surveyed by Bloomberg. Revenue rose 4.5 percent to 6.5 billion euros.
Stagecoach (SGC), the operator of Britain’s busiest commuter- train service, advanced 3.5 percent to 292.8 pence. The stock was raised to overweight, meaning investors should buy the shares, from neutral at HSBC.
TNT Express
TNT Express NV (TNTE) gained 0.9 percent to 8.89 euros after the Dutch express-delivery company that United Parcel Service Inc. plans to buy for $6.8 billion said second-quarter profit increased 10-fold. That beat analysts’ estimates.
Ryanair fell 2.3 percent to 3.81 euros after Europe’s biggest discount airline said quarterly profit declined 29 percent as fuel costs rose and a sluggish economy limited its ability to increase fares.
Net income for the three months ended June 30 dropped to 98.8 million euros from 139.3 million euros a year earlier, Ryanair said today. Analysts had predicted a profit of 106 million euros, based on the average of six estimates in a Bloomberg survey. Sales rose 11 percent to 1.28 billion euros.
Reckitt Benckiser Group Plc (RB/) slipped 1.6 percent to 3,484 pence even after the maker of French’s mustard and Nurofen painkillers reported first-half profit that beat analysts’ estimates as it sold more products in developing markets. The shares have rallied 9.5 percent this year, while the FTSE 100 Index has advanced 1.4 percent.
JC Decaux SA plunged 8.7 percent to 16.66 euros. The French billboard company’s first-half net income fell 13 percent to 82.4 million euros as organic growth in the second quarter was “slightly lower than expected.”
To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
