EUROPE REPORT: Eurostoxx 50:2,970.56 (+43.14) Frankfurt DAX:7,063.37 (+39.10) Paris CAC:4,021.98 (+57.14)
EUROPEAN STOCKS rose yesterday, snapping the Stoxx Europe 600 Index’s largest two-day drop in five months, as German business confidence climbed to a record high in January and banking shares rallied.
The Stoxx Europe 600 Index gained 0.8 per cent to 281.49 at the close in London. the gauge lost 0.8 per cent this past week, its first weekly decline in 2011.
“We stick to our view that 2011 should be a good year for European equities,” a team of strategists at Exane BNP Paribas led by Lars Kreckel wrote in a report.
“Equity valuations remain significantly below historical averages on most measures. Nevertheless, in the short term, we note that the degree of bullishness in the market has risen significantly, which makes a temporary correction increasingly likely.”
The Stoxx 600 is trading at about 11 times the estimated profits of its companies, near the cheapest valuation since April 2009, according to data compiled by Bloomberg.
Banking stocks were among the best performers of the 19 industries in the Stoxx 600.
Dexia gained 3.9 per cent to €3.07, while Piraeus Bank and Credit Agricole rose 5.8 per cent to €1.63 and 3.3 per cent to €11.26, respectively.
RBS jumped 6.5 per cent to 44.9p. The bank has held talks with the government to leave the UK’s Asset Protection Scheme, the Financial Times reported, citing two people involved in the discussions.
Bankinter advanced 3 per cent to €5.15 as chief executive officer Maria Dolores Dancausa said the outlook for this year is “rather better”.
Banco de Sabadell climbed 2.1 per cent to €3.63 as Goldman Sachs removed the stock from its “conviction sell” list, leaving a “sell” recommendation on the stock. ArcelorMittal advanced 2.9 per cent to €27.25.
Finmeccanica soared 4.5 per cent to €9.79 as Italy’s biggest defence company said that it generated free operating cash flow of as much as €450 million ($611 million) in 2010, beating a previous forecast of €300 million at most.
The shares of Electrolux, the Swedish maker of home appliances, increased 4.9 per cent to 187 kroner. – (Bloomberg)
