SABMiller climbs after full-year earnings
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets moved higher in afternoon action on Thursday, as investors took inspiration from a strong open in the U.S. where better-than-expected manufacturing data provided support.
The Stoxx Europe 600 index XX:SXXP +0.10% rose 0.2% to 340.89, after trading with a loss earlier in the day.
Gainers: SABMiller, Raiffeisen Bank
Helping lift the benchmark, shares of SABMiller PLC UK:SAB +3.50% gained 3.7% after the brewer reported a slight increase in full-year profit. The company said its strength in developing markets such as Africa and Latin America had held up in the past 12 months, but that it sees ongoing weakness in Europe and North America.
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Also pushing higher, shares of Austria’s third-largest bank in terms of assets, Raiffeisen Bank International AG AT:RBI +5.35% , picked up 5.1% after the company reported an increase in first-quarter profit even though tensions between Ukraine and Russia caused an increase in risk provisions.
On a more downbeat note, shares of Royal Mail PLC UK:RMG -8.89% slumped 8.2% after the company said it faces a couple of headwinds, including intense competition on the parcels side.
Lift from U.S. stocks
More broadly, markets nudged higher in the afternoon after U.S. stocks opened in positive territory. The preliminary manufacturing purchasing managers index for the U.S. in May rose to a three-month high of 56.2, signaling a faster rate of expansion. Meanwhile jobless claims rose more than expected last week.
Investors also took in a round of PMIs from Europe and the latest developments in Ukraine. At least 11 soldiers died and 30 others were wounded in an attack on troops in Ukraine’s eastern region of Donetsk, according to media reports. The news came as Russia appeared to be pulling its troop back from the Ukraine border and Ukrainians prepare to head to the polls this weekend to pick a new president.
Meanwhile, Markit’s euro-zone composite PMI fell to a two-month low of 53.9, from 54 in April. However, it came in slightly ahead of expectations and stayed above the 50.0 level that indicates growth. Markit said the data indicate the euro zone is having its best quarter in three years and that “ongoing improvement in business conditions was evident in both manufacturing and services.”
The country-specific readings showed further divergence between powerhouse Germany and France, which has struggled with economic headwinds recently. The French composite PMI slipped into contraction at 49.3, while Germany stayed at 56.1 in May.
France’s CAC 40 index FR:PX1 +0.06% fell 0.1% to 4,462.88, while Germany’s DAX 30 index DX:DAX +0.14% put on 0.1% to 9,711.88.
Howard Archer, chief U.K. and European economist at IHS Global Insight, said in a note that the PMIs indicate that the euro zone is having trouble building growth momentum.
“The purchasing managers surveys do little to ease pressure on the ECB to take decisive stimulative action at its June meeting,” he said.
Speculation on ECB rate cut
European Central Bank President Mario Draghi hinted at the May policy meeting that the Governing Council would be ready to launch additional easing measures in June. The comments sparked widespread speculation of another rate cut that would send deposit rates into negative territory for the first time ever. The euro EURUSD -0.23% has been steadily following since the comment and traded at $1.3660 on Thursday, down from $1.3683 late Wednesday. Ahead of the May ECB meeting the euro traded close to the crucial $1.40 level.
In China, the manufacturing PMI rose to a five-month high of 49.7 in May, from a final reading of 48.1 in April, according to the preliminary reading from HSBC. The data supported miners in Europe, as they are heavily exposed to Chinese growth. Shares of Antofagasta PLC UK:ANTO +2.14% picked up 2.1%, Rio Tinto PLC UK:RIO +1.49% RIO +1.27% AU:RIO +2.63% rose 1.2% and Glencore PLC UK:GLEN +1.21% GLCNF +0.73% added 1.2%.
The gains helped lift the U.K.’s FTSE 100 index UK:UKX +0.07% , which rose 0.1% to 6,824.23.
