Sun, Apr 29, 2012 - Page 10 News List

Europe stocks climb despite French and Dutch uncertainties

Bloomberg

European stocks advanced for a second week after better-than-forecast earnings outweighed disappointing economic data and political uncertainty in France and the Netherlands.

The STOXX Europe 600 Index advanced 0.5 percent to 259.12 this week, extending last week’s 1.7 percent rally. The measure has still lost 4.9 percent since its 2012 high last month amid renewed concerns that the eurozone is yet to contain its sovereign-debt crisis.

“Equity investors are relying on supportive earnings and valuation considerations to offset top-down challenges that have intensified,” Ian Williams, a London-based strategist at Peel Hunt, wrote in a note to clients. “The euro-zone’s economic weaknesses are prompting a political backlash, the US recovery is losing pace and the UK is back in recession.”

NATIONAL INDICES

National benchmark indices rose in 12 of the 18 Western European markets. The UK’s FTSE 100 Index gained 0.1 percent, Germany’s DAX added 0.8 percent and France’s CAC 40 climbed 2.4 percent. Spain’s IBEX 35 Index advanced 1.5 percent even as Standard & Poor’s cut its credit rating for the country for the second time this year.

The STOXX 600 sank to a three-month low on Monday after reports showed manufacturing contracted in the eurozone and China, while French President Nicolas Sarkozy became the first incumbent since 1958 not to win the opening round of the nation’s election. Dutch Prime Minister Mark Rutte also offered to resign after struggling to clinch an austerity deal.

DOUBLE-DIP RECESSION

Reports this week also showed that the UK slipped into its first double-dip recession since the 1970s, while an index of executive and consumer sentiment in the eurozone fell to 92.8 from a revised 94.5 last month. In the US, the economy expanded less than forecast in the first quarter, while more Americans than estimated filed for jobless claims last week.

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