Upbeat EU stocks see sixth weekly gain


Sun, May 25, 2014 - Page 15

European stocks advanced for a sixth consecutive week as a gauge of eurozone confidence increased by more than expected on the back of better-than-estimated manufacturing data from China and the US.

Ryanair Holdings PLC climbed 13 percent this week after predicting a return to profit growth this year, while Daily Mail and General Trust PLC jumped 11 percent after announcing an initial public offering for its Zoopla Property Group.

German utilities EON SE and RWE AG added more than 7 percent after RBC Capital Markets Inc raised its recommendations on the stocks over expectations of tax refunds.

Losing out this week was Royal Mail PLC, which slid 8 percent after its profits missed estimates.

The STOXX Europe 600 Index posted its longest streak of weekly gains since November last year, rising 0.8 percent this week to1.76, just off the highest level since January 2008 that it reached on Tuesday last week. The benchmark index traded at 15.3 times the projected earnings of its members at the end of the week, up from about 13.8 times in January.

“It has been really encouraging for investors to see these numbers coming in, especially the consumer confidence figures rising to the highest levels in several years,” Peter Garnry, head of equity strategy at Saxo Bank A/S in Hellerup, Denmark, said by telephone.

“China was a pleasant surprise because data has been weak lately. We would expect confidence to continue to accelerate which will be positive GDP-wise for Europe. This data confirms that the eurozone is slowly pulling itself out of the mud, though it is still at a slow pace,” Garnry said.

National benchmark indices advanced in 16 of the 18 Western European markets this week, with France’s CAC 40 gaining 0.8 percent, Germany’s DAX adding 1.4 percent and the FTSE 100 slipping 0.6 percent in London.

A gauge of household confidence in the eurozone rose from minus-8.6 last month to minus-7.1 this month — the highest since October 2007 — the European Commission said in a preliminary report on Wednesday. That beat the median forecast of minus-8.3 made by 23 economists polled by Bloomberg News.

In China, a preliminary purchasing managers’ index from HSBC Holdings PLC and Markit Economics rose to a five-month high of 49.7 this month. That beat the 48.3 median estimate given by analysts surveyed by Bloomberg News. Last month’s final reading was 48.1 and readings below 50 signal contraction.

In the US, a separate report from Markit showed a measure of manufacturing in the world’s No. 1 economy rose from 55.4 last month to 56.2 this month, surpassing the 55.5 reading projected by economists in a Bloomberg poll. A similar gauge for the eurozone fell to 52.5 this month from 53.4 last month, missing the average analysts’ estimate of 53.2.