Sun, May 04, 2003 - Page 10 News List

European stocks rise despite lack of signs of a recovery

BLOOMBERG , LONDON

A rally in European stocks that lifted the Dow Jones Stoxx 600 Index in April to its biggest monthly gain in 3 1/2 years slowed this week as investors sought evidence that an end to the Iraq war would spur economic and profit growth.

Unilever was the latest company to disappoint investors, after saying on Friday that first-quarter sales of its top brands rose less than it forecast. Stocks including Volkswagen AG fell as a report showed European manufacturing shrank in April. Concern a weaker dollar may crimp corporate earnings also weighed on shares.

The Stoxx 50 Index gained 0.3 percent to 2324.69, leaving it 1.5 percent higher this week. The Stoxx 600 advanced 0.1 percent, and is up 1.9 percent in the period. Both indexes on Friday rose for the first session in three.

The Stoxx 50 and Stoxx 600 each surged 10.5 percent in April as the war in Iraq finished sooner than some investors anticipated, fueling speculation global econ-omies may rebound. The increase in the Stoxx 50 was its biggest monthly gain since October.

Reports on the European economy this week suggested this optimism may be premature. Manufacturing in the region shrank in April for the seventh time in eight months, a survey for Reuters Group Plc showed yesterday. French business confidence last month unexpectedly declined to a 15-month low, a report April 29 showed.

Nine of the 17 Western European benchmark indexes fell on Friday. Germany's DAX Index rose 1.5 percent and France's CAC 40 Index gained 0.3 percent. The UK's FTSE 100 Index added 1.9 percent. All western Europe's stock markets were closed Thursday for the May 1 holiday, except in the UK, Denmark and Ireland.

June futures on the Euro Stoxx 50 Index of companies based in the 12 countries sharing the euro advanced 1.1 percent to 2317 on Friday. The underlying index lost 0.1 percent to 2321.90.

Unilever, the world's biggest food and soap maker, on Friday fell 8.5 percent to ?5.555 in UK trading and 9 percent to 51.35 euros in the Netherlands. First-quarter sales of its 400 leading brands advanced 3 percent, less than the 4 percent to 5 percent rise the company forecast. For the week, the shares dropped 7.8 percent in London and 7.3 percent in Amsterdam.

Unilever's Swiss rival Nestle SA lost 1.6 percent in the week to 270.5 Swiss francs.

Volkswagen, Europe's largest carmaker, which makes about a fifth of its revenue in North America, fell 1.5 percent to 30.76 euros in the week. The decline in the value of the dollar is eroding earnings European companies generate in the US and making European exports to the world's biggest economy more expensive, investors say.

Bayer AG, the world's biggest specialty chemical maker, which generates about a third of its sales in North America, lost 2.8 in the week to 16.28 euros.

ABN Amro Holding NV, the Netherlands' largest bank, led declines among Stoxx 50 shares for the week, shedding 8.5 percent, after brokers including Goldman, Sachs & Co downgraded the stock on concern the bank may have trouble improving on its first-quarter earnings.

Allianz AG, Europe's largest insurer, had the biggest gain among members of the Stoxx 50, advancing 15 percent, as the company said it found buyers for 99.7 percent of stock it sold to existing investors. The company raised 4.4 billion euros in the share sale.

Munich Re, the world's biggest reinsurance company, staged the second-largest advance on the index, rising 13 percent. Its Chief Executive Officer Hans-Juergen Schinzler said he's resigning and the company said first-quarter operating results "substantially" improved.

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