European stocks climbed for a sixth straight week, the longest winning streak in more than two years, amid speculation that central bank policymakers would add to stimulus measures to support the economy.
The STOXX Europe 600 Index climbed 0.7 percent to 256.26 last week, for the longest stretch of gains since April 2010. The measure has rallied 9.6 percent from this year’s low on June 4 as the European Central Bank (ECB) and People’s Bank of China cut their benchmark interest rates and euro-area leaders eased repayment rules for Spanish banks and relaxed conditions for possible aid to Italy.
National benchmark indexes rose in 12 of the 18 western European markets. Germany’s DAX rallied 2.3 percent, France’s CAC 40 advanced 0.4 percent and the UK’s FTSE 100 increased 0.1 percent.
ASML Holding NV is due to become the first member of the Euro STOXX 50 Index to report earnings this quarter when Europe’s biggest maker of semiconductor equipment releases results on Wednesday. The shares gained 2.7 percent this week as Intel Corp said it would invest as much as US$4.1 billion in the Dutch company.
Companies in the STOXX 600 will earn 23.93 euros a share this fiscal year, according to analyst estimates compiled by Bloomberg. The projections have been cut from more than 25 euros a share at the start of the year, the data show.
“Earnings season is going to be very complicated,” said Bruno Ducros, a fund manager at CamGestion in Paris, which oversees about US$2 billion in stocks. “So far, there have been a number of profit warnings.”
European stock strategists are backing away from their most-pessimistic forecasts. While sticking to predictions for losses of as much as 16 percent, Morgan Stanley’s Ronan Carr raised his recommendation on European equities to neutral on July 2 and Alain Bokobza of Societe Generale SA said he has started to reduce the underweight call he has had for at least two years. Exane BNP Paribas said investors can find bargains among companies most reliant on economic growth.
Aegis surged 45 percent as Dentsu, the 111-year-old Japanese advertising company, agreed to buy the UK company in a ￡3.16 billion (US$4.9 billion) deal. Aegis pushed an index of media shares in the STOXX 600 to the biggest gain of the year, with a 3.5 percent advance.
Vivendi SA jumped 7.9 percent. Chairman Jean-Rene Fourtou said that the company may sell its US$8.1 billion stake in Activision Blizzard Inc, the largest US video-game publisher.
Afren PLC, a UK-based oil and gas company focused on Nigeria and Iraq, climbed 8.4 percent. Exxon Mobil Corp and Eni SpA are examining possible bids for Afren, the UK’s Daily Mail said last Monday. Either one could offer at least ￡2 a share, the newspaper reported, without saying where it got the information.
Spanish banks fell, led by Bankia SA, which dropped 23 percent. Banco Popular Espanol SA slid 5.2 percent.
Spanish lenders’ net borrowings from the ECB jumped to a record 337 billion euros (US$411 billion) last month as the European bailout agreement for the nation’s lenders did not ease their access to funding.
Net average ECB borrowings climbed from 288 billion euros in May, the Bank of Spain said on its Web site July 13. Gross borrowing was 365 billion euros, up from 325 billion euros in May, and accounting for 30 percent of gross borrowing in the whole euro region.