Europe cheered by France's rating

MARKETS ROSE yesterday as there were increasing signs that corporate earnings are more robust than investors previously believed and ratings agency Fitch backed away from downgrading France’s triple-A status.

Updates from aluminium producer Alcoa and data from China suggesting that demand for commodities remains strong boosted mining and exploration stocks. Analysts such as Robert Buckland of Citigroup suggested there are grounds to be optimistic about 2012.

DUBLIN

Virtually all leading stocks on the Dublin market enjoyed a good run, with some of them defying analysts’ opinions that they have been overbought in recent weeks.

The market’s biggest stock, international building materials giant CRH, gained 4.5 per cent to end the day at €15.285.

Dealers suggested that factors such as its strong balance sheet and exposure to the US mean that it remains popular with investors.

Low-cost airline Ryanair came unstuck late in the day, dipping 1 per cent to €3.89, but it had traded up at about €3.95 and €3.96 earlier amid strong buying interest.

International packaging group Smurfit Kappa was also popular. It gained 3.27 per cent to close at €5.05. Traders said the stock tends to outperform when the market is on the way up.

Value seekers went after DIY group and builders’ merchant Grafton, which gained 4.17 per cent to finish at €2.50.

Listed bookmaker Paddy Power broke the €44.50 mark during trade, but slipped back later on in the day to end 0.24 per cent off its opening quote at €44.385.

There were few fallers of any significance yesterday, but industrial group DCC, which draws half its revenues from home heating oil distribution, suffered as investors believe the mild winter could hit earnings. It closed 1.13 per cent down at €18.835.

LONDON

Londons blue chip FTSE 100 rose 84.44 points, or 1.5 per cent to 5,696.70, making up for the 1.5 per cent decline since last Wednesday.

However, trade was again thin, just 95 per cent of its already light average 90-day volume.

UK gains were supported as Wall Street responded favourably to Alcoa’s forecast of 7 per cent growth in global aluminium demand this year and a global supply deficit, despite the company missing earnings expectations.

The announcement helped lift UK miners, while integrated oils rallied too as both sectors gained in tandem with underlying commodity prices after data in China showed commodities imports remained robust in December despite ebbing demand.

Energy firm BG added 1.5 per cent as three sources with direct knowledge of the matter said it had received six to seven bids for acquiring its 65 per cent stake in India’s Gujarat Gas, in a deal valued at about $900 million.

Banks bounced back as Fitch backed away from threats to cut France’s triple-A credit rating this year. Barclays and Royal Bank of Scotland gained 5.7 and 5.2 per cent respectively.

There was relief for hard-pressed retailers as Marks & Spencer gained 3 per cent and Debenhams added 9 per cent.

EUROPE

The Stoxx Europe 600 Index, which tracks leading stocks across 18 markets, advanced 1.8 per cent to 250.82 at the close, erasing Monday’s 0.5 per cent drop. The gauge advanced as economic reports around the world added to optimism the global economy can withstand the euro-area’s debt crisis.

BHP Billiton, the world’s largest mining company, climbed 3.4 per cent to 2,014 pence. Rio Tinto, the third-biggest, increased 3.6 per cent to 3,428.5 pence and Xstrata Plc added 3.1 per cent to 1,043 pence.

Carmakers advanced as Bayerische Motoren Werke, Daimler and Audi, owned by Volkswagen, said they plan to beat industry growth in 2012 following record sales last year.

BMW’s deliveries this year will rise by a single-digit percentage that outpaces the car market’s expansion of 4 per cent to 5 per cent, Ian Robertson, the company’s sales chief, told reporters yesterday at the North American International Auto Show in Detroit. The chief executive officers of Audi and Daimler said they expect their sales to exceed 4 per cent.

Volkswagen, the biggest European carmaker, gained 3.2 per cent to €125.70, BMW rallied 3.3 per cent to €58.72 and Daimler rose 4.2 per cent to €38.26.

US

US stocks rose, sending the Standard & Poor’s 500 Index toward its highest level since July, on bets that China may act to spur economic growth.

All 10 groups in the SP 500 advanced as commodity, financial and industrial shares had the biggest gains. Bank of America and Caterpillar added at least 2.6 per cent. Alcoa, the first company in the Dow Jones Industrial Average to report quarterly results, trimmed a rally of as much as 4.5 per cent. – (Additional reporting, Bloomberg/Reuters)