European stocks advanced for a second week as central banks eased lending, investors speculated that policymakers would act to support the region’s debt crisis and US jobs data spurred optimism the world’s largest economy would avoid a recession.
The STOXX Europe 600 Index advanced 2.6 percent to 231.99 this week as the Bank of England expanded its bond-purchase program and German Chancellor Angela Merkel said she was ready to discuss recapitalizing lenders.
Still, the gauge has retreated 20 percent since this year’s high on Feb. 17 and is trading at 9.8 times estimated corporate earnings, near the cheapest since March 2009, according to data compiled by Bloomberg.
“The fact that governments have acknowledged that banks need to be recapitalized is a relief,” said Arnaud Scarpaci, a fund manager at Agilis Gestion SA in Paris. “This week’s employment numbers were good news for the market. A lot of investors were betting on a recession and now they have to realize that won’t happen.”
The Bank of England said on Thursday that it would boost bond purchases as government budget cuts and Europe’s debt crisis jeopardize Britain’s economic recovery. The Monetary Policy Committee raised the ceiling for so-called quantitative easing to ￡275 billion (US$423 billion) from ￡200 billion.
The European Central Bank announced the reintroduction of yearlong loans, giving banks access to unlimited cash through January 2013. It will also resume purchases of covered bonds to encourage lending.
At the same time, the European Commission is pushing for a coordinated capital injection into lenders and Merkel said policymakers “shouldn’t hesitate” if it turns out financial institutions were undercapitalized.
The EU will discuss bank capital at its summit on Oct. 17 to 18, with finance ministers left to carry out the implementation, Merkel said on Friday after talks with Dutch Prime Minister Mark Rutte.
Using the enhanced European rescue fund to support banks should only be permitted as a measure of last resort, she said.
“Solving the European debt crisis is all about Germany,” said Morten Kongshaug, chief equity strategist at Danske Bank A/S in Copenhagen. “If they want to solve this they can do it.”
National benchmark indexes gained in 14 of Europe’s 18 western markets. France’s CAC 40 rallied 3.8 percent, the UK’s FTSE 100 rose 3.4 percent and Germany’s DAX increased 3.2 percent. Greece’s ASE slid 6.8 percent.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979. Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows. While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead. Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion