EU stocks see third weekly gain after strong profit reports


Sun, Oct 27, 2013 - Page 15

European stocks posted a third weekly gain as companies from Royal Philips NV to Akzo Nobel NV reported profits that beat estimates and US jobs data fueled bets that the US Federal Reserve will wait until March to pare stimulus.

Philips and Akzo Nobel rose more than 5 percent, while Celesio AG jumped 13 percent after McKesson Corp agreed to buy the German drug wholesaler for 3.9 billion euros (US$5.4 billion).

Aberdeen Asset Management PLC climbed 11 percent after saying it is in talks to buy Scottish Widows Investment Partnership and form an alliance with Lloyds Banking Group PLC, while ABB Ltd increased 8.5 percent as quarterly profit rose 10 percent.

The STOXX Europe 600 Index advanced 0.5 percent to 320.09 this week, extending its rally so far this year to 14 percent. The gauge climbed to a five-year high of 320.97 on Tuesday as it capped a nine-day winning streak, the longest since June 2010.

National benchmark indices rose in 10 of the 18 western European markets this week. The UK’s FTSE 100 advanced 1.5 percent, while Germany’s DAX gained 1.4 percent to a record high and France’s CAC 40 fell 0.3 percent.

“We have profit growth, not a lot of it but we have it,” Steven Bell, a London-based fund manager at F&C Asset Management, said by telephone. “That constitutes a lukewarm case for equities, but when you consider the alternatives, the attractiveness becomes greater.”

In the US, payrolls climbed less than projected last month, data released on Tuesday more than two weeks later than scheduled showed. Consumer confidence in the world’s largest economy fell to the weakest level so far this year, another report showed.

A Bloomberg survey last week showed that economists expect the Fed to delay paring its bond purchases until March as Washington’s 16-day partial shutdown this month weighs on fourth-quarter growth.

The addition of 148,000 workers by US employers trailed the median projection in a Bloomberg survey for an increase of 180,000, but unemployment fell to 7.2 percent, the lowest level since November 2008.

“There’s still some slack in the US economy and employment continues to rise,” Bell said. “The big picture for the Fed is that the economy needs stimulus so let’s give it.”

In China, a private measure of manufacturing strengthened more than forecast this month. The reading of 50.9 for the purchasing managers’ index from HSBC Holdings PLC and Markit Economics beat the 50.4 median estimate from analysts surveyed by Bloomberg News. Fifty is the threshold for expansion.

The advance reading of a composite index for eurozone manufacturing and services dropped to 51.5 this month from 52.2 last month. The median economist forecast had called for 52.4.