Sun, May 27, 2012 - Page 10 News List

European stocks post first weekly gain in a month

CHEAP VALUATIONS:While concern over the debt crisis lingers on, some investors feel most of the bad news has been priced in and have started picking up stocks


European stocks posted their first weekly advance in a month, as China pledged to bolster growth and a three-week selloff left the STOXX Europe 600 Index at its cheapest level since January.

A gauge of lenders rallied the most in two months even as Moody’s Investors Service downgraded some of the region’s banks. Construction companies rebounded on speculation the Chinese government would accelerate its infrastructure projects. Vodafone Group climbed as revenue topped estimates.

The STOXX 600 rose 1.5 percent to 242.49 this week as 18 of 19 industry groups gained. The gauge is still down 11 percent from this year’s high on March 16 amid mounting concern Greece will fail to implement budget measures required to stay in the euro. The selloff has left the gauge’s valuation at 10.1 times estimated earnings, according to data compiled by Bloomberg.

“It is still debatable whether or not one buys into equity markets at these levels because uncertainties are profound, but value is starting to be seen,” said Andrew Milligan, head of global strategy at Standard Life Investments Ltd in Edinburgh. “All we can say is a lot of bad news has been priced in.”

Chinese Premier Wen Jiabao (溫家寶) said this week the nation should put “stabilizing growth in a more important position.” In comments posted on the government’s Web site, he called for an increase in lending to support construction, spurring expectations that the government would step up stimulus measures.

The STOXX 600 still sank 2.1 percent on Wednesday, as former Greek prime minister Lucas Papademos told the Wall Street Journal that while it was unlikely Athens would leave the euro, it was still a risk.

EU leaders met in Brussels on Wednesday to discuss the region’s debt crisis. Italian Prime Minister Mario Monti told Italian television station La7 that the majority of EU leaders at the meeting backed joint euro-area bonds and that Italy could help persuade Germany to support Europe’s “common good.”

National benchmark indexes rose in all the 18 western European markets this week, except Greece, Spain and Portugal. The UK’s FTSE 100 rose 1.6 percent, France’s CAC 40 gained 1.3 percent and Germany’s DAX rose 1.1 percent.

A gauge of banks rallied 2.2 percent, the biggest advance since March. KBC Groep NV, Belgium’s largest bank and insurer, jumped 10 percent, while Sweden’s Nordea Bank AB gained 5.7 percent and UBS AG increased 4.3 percent.

Moody’s this week downgraded Dexia Bank Belgium, Sweden’s Nordea and Svenska Handelsbanken AB, and Norway’s DNB Bank ASA. It downgraded 16 Spanish banks last week.

A gauge of construction-related firms rose 2.3 percent, paring some of last week’s 6.5 percent selloff. The shares climbed as the China Securities Journal reported the country was planning to speed up the approval of infrastructure projects.

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