MW: Europe stocks rise on Greece aid, Alcoa earnings
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets rose for a second straight day on Tuesday, after euro-zone finance ministers agreed on an aid disbursement for Greece and better-than-expected results from Alcoa Inc. sparked cautious optimism about earnings season.
The Stoxx Europe 600 index XX:SXXP +0.79% climbed 0.6% to 293.98, after closing at the highest level in three weeks on Monday.
Shares of Osram Licht AG XE:OSR +14.71% jumped 14% as HSBC initiated coverage of the firm with an overweight rating. Shares in the former lighting unit of Siemens AG DE:SIE +1.57% began trading on Monday following a spinoff.
Neil Wilkinson, senior fund manager at Royal London Asset Management, said two factors supported the move higher in Tuesday’s trade.
“The U.S. earnings season has kicked off well with the Alcoa earnings and the comments suggested that they expect Chinese growth to be a little stronger than what the market currently thinks,” he said.
He added: “The life support for Greece has been kept on and any difficult decisions that may have to be taken on Greece have been kicked to the other side of the German election.”
“But I think more broadly, the market started last week to digest the beginning of the end of [quantitative easing] in the U.S. and were buoyed by comments we had from the [European Central Bank] and the [Bank of England] that despite easing in the U.S. coming to an end, we will still have low rates for the foreseeable future in Europe and the U.K,” he said.
Global stock markets reached multiyear highs in May, boosted by aggressive easing measures from central banks, but were sent sharply lower when U.S. Federal Reserve Chairman Ben Bernanke said improving economic data strengthened the case for a reduction in easing.
Greece relief
On Tuesday, investors welcomed an agreement from euro-zone finance ministers to disburse 3 billion euros ($3.86 billion) in aid to Greece on condition the country meets the goals laid out under the second international bailout.
“The decision by European politicians to kick the can down the road yet again keeps Greece from immediate insolvency while at the same time minimizing the payments from other European governments, and has been broadly welcomed by markets,” said Rebecca O’Keeffe, head of investment at Interactive Investor, in a note.
The Athex Composite index GR:GD -1.21% gained 0.4% to 861.91.
European stock markets also mirrored gains seen on Wall Street on Monday, after earnings from aluminum giant Alcoa AA -0.38% beat analysts’ estimates and signaled a positive kickoff to the second-quarter earnings season.
U.S. stock futures also pointed to a higher open on Tuesday.
Among country-specific indexes in Europe, the U.K.’s FTSE 100 index UK:UKX +1.09% climbed 0.8% to 6,502.66 as mining firms tracked most metals prices higher. Shares of Rio Tinto PLC UK:RIO +3.11% RIO +2.35% AU:RIO +0.77% gained 2.7% and Anglo American PLC UK:AAL +3.33% rose 3.2%.
The British pound GBPUSD -0.5579% , however, dropped to $1.4862 from $1.4950 in late North American trade on Monday, after weaker-than-expected industrial production data stoked expectations of further monetary easing by the Bank of England.
Germany’s DAX 30 index DX:DAX +1.49% added 1% to 8,049.98. Shares of Siemens AG DE:SIE +1.57% rose 1% after Deutsche Bank lifted the industrial conglomerate to hold from sell.
France’s CAC 40 index FR:PX1 +0.82% gained 0.6% to 3,846.05.
Shares of LVMH Moët Hennessy Louis Vuitton FR:MC +1.67% gained 1.7% after the luxury-goods firm said late Monday it has agreed to buy a majority stake in Italian cashmere brand Loro Piana.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
