Sun, Jan 05, 2003 - Page 10 News List

Renault, Carrefour may add to rally in European equities

BLOOMBERG , FRANKFURT

European stocks may rise for a second week as some investors expect economic statistics, and reports from companies such as Renault SA and Carrefour SA, to signal that the region will grow along with the US.

The Dow Jones Stoxx 50 Index this week gained 5.7 percent, its best weekly performance since October, as a report showed that US manufacturing grew in December. Europe's 300 biggest companies rely on the US, the region's largest export market, for about a fifth of sales.

"Things are improving, that's quite obvious," said Henk Boom, who helps oversee about 1.5 billion euros (US$1.5 billion) at Optimix Vermogensbeheer in Amsterdam. "We could see positive surprises" for earnings and share prices this year.

Boom recently increased his funds' stock holdings to 60 percent of assets from 55 percent. On Friday, he bought shares of Atlas Copco AB, a Swedish company that owns the second-largest equipment-rental business in North America.

The report from the Institute for Supply Management bolstered optimism that stocks will rally in 2003. Benchmarks in Europe will climb 20 percent, according to the median forecast of 12 strategists surveyed last month by Bloomberg News. The Stoxx 50 slid 35 percent last year, its biggest decline since the index's history began in 1987.

Markets in Sweden, Finland, Austria, Spain and Greece are closed on Monday for a holiday.

Three German companies -- Bayer AG, the country's largest drugmaker; DaimlerChrysler AG, fifth among the world's carmakers, and Siemens AG, the country's largest electronics and engineering company -- each rose more than 7 percent and was among the Stoxx 50's best performers this week.

All three companies get at least a quarter of their sales in the US, the world's largest economy. Their share prices plunged 39 percent or more last year.

Reports due next week on the European services industry and consumer confidence and on unemployment in Germany, the region's largest economy, may provide indications about the timing of any expansion this year.

The BME/Reuters Purchasing Managers' Index for service companies is due for release Monday, the same day as the results of a similar survey of US companies by the Institute for Supply Management.

On Tuesday, the EU will release its confidence index for the 12 countries sharing the euro, the region's single currency. Jobless figures from Germany will follow on Thursday.

European stocks dropped last year as analysts slashed estimates for economic expansion for the year and for this year. The European Central Bank in December lowered its estimate for this year's growth in the euro region to as little as 1.1 percent. In June, the ECB had predicted an expansion of at least 2.1 percent.

Renault, whose stock gained 5.1 percent this week after climbing 13 percent last year, is scheduled to report on full-year sales Wednesday. The second-biggest French carmaker said in November that profit would reach its target of 2 percent of sales for the year, up from 1.3 percent in the prior year.

Carrefour probably will say Thursday that sales excluding currency effects rose 4.7 percent last year, according to BNP Paribas SA. The shares advanced 4.6 percent this week after tumbling 27 percent last year.

Dixons Group Plc may say Wednesday that profit in the six months ended Nov. 9 rose 8 percent, according to a Bloomberg survey of 10 analysts. Shares of Britain's largest consumer-electronics retailer added 0.7 percent this week after losing almost two-fifths of their value last year.

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