Europe’s Dow Jones STOXX 600 Index resumed gains this week, erasing its loss for the year and posting a record monthly rally amid better-than-expected earnings and speculation that the global recession is easing.
BASF SE, the world’s biggest chemical company, Sanofi-Aventis SA and Siemens AG rose as their profits topped forecasts. Banks surged to the highest since December on expectations the industry is recovering from the credit crisis.
The STOXX 600 added 2.3 percent to 200.23 in the four days this week, its seventh advance in eight weeks. Europe’s regional benchmark climbed 13 percent last month, the biggest monthly gain since records began in 1987. The measure, which is now up 0.9 percent for the year, did not update on Friday, as all European markets except the UK and Denmark were closed.
Banks led the April advance as Credit Suisse Group AG beat analysts’ profit forecasts and Barclays PLC indicated its first-quarter performance was “well ahead” of last year. Confidence in the outlook for the European economy rose, a report showed this week, while investors also speculated that government plans to purchase illiquid assets from banks will pull the global economy out of its recession.
“We have significant numbers supporting our general expectation that the economy will turn around in late 2009,” said Henrik Drusebjerg, a senior strategist at Nordea in Copenhagen. “If that is the case, equity markets will turn around six to nine months before.”
The UK’s FTSE 100 rallied 2.1 percent in the week, Germany’s DAX rose 2 percent and France’s CAC 40 added 1.8 percent. Sweden’s OMX Stockholm 30 Index lost 2 percent as profit at Ericsson AB fell for a seventh straight quarter.
BASF surged 5.3 percent after it reported first-quarter net income of 375 million euros (US$498.8 million), beating the 124 million euro average estimate of analysts.
Sanofi jumped 7.5 percent. France’s largest drugmaker said April 29 that first-quarter adjusted net income climbed 16 percent to 2.18 billion euros, helped by increased demand for its Lantus medicine for diabetics.
That beat the 1.98 billion-euro median estimate of 10 analysts surveyed by Bloomberg.
Siemens, Europe’s largest engineering company, advanced 3.5 percent. Operating profit at the company’s main industry, energy and health-care units, referred to as “sector profit,” climbed to 1.84 billion euros from 1.29 billion euros, the company said on Wednesday. Analysts in a Bloomberg survey predicted 1.65 billion euros.
More than half of the 132 companies in the STOXX 600 that reported earnings results from April 7 to Thursday exceeded analysts’ predictions, data compiled by Bloomberg show. That trails the 70 percent of companies in the S&P 500 that beat estimates.
The STOXX 600 Banks Index climbed 5 percent to the highest since Dec. 10. The measure, the heaviest among 19 industries in the broader STOXX 600, tumbled 83 percent from April 2007 to this March as global losses tied to subprime mortgages at financial firms climbed toward more than US$1.3 trillion.
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