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Sun, Jul 19, 2009 - Page 10 News List

European markets cap biggest weekly advance in months

BLOOMBERG

European stocks advanced on Friday, extending the Dow Jones STOXX 600 Index’s biggest weekly rally since November, as Sandvik AB announced better-than-forecast earnings and US housing starts increased.

Sandvik, the world’s largest maker of metal-cutting tools, surged 7.1 percent in Stockholm after reporting an operating loss that was smaller than the company predicted last month. Accor SA slumped 7.5 percent as Europe’s biggest hotelier said sales slipped. Novartis AG advanced 1.4 percent after JPMorgan Chase & Co recommended Europe’s second-largest drugmaker.

The STOXX 600 added 0.4 percent to 210.67, the highest level since June 12. The gauge has climbed 6.8 percent this week as companies from Goldman Sachs Group Inc to Intel Corp and Johnson & Johnson reported profits that beat estimates.

“Earnings are moving in the right direction,” said Emmanuel Soupre, who helps manage about US$18 billion at Neuflize OBC in Paris.

“We’re satisfied with the positive elements we have today, but we take it a day at a time. Minimal elements of a rebound exist for the end of the year,” Soupre said.

Per-share profits have slipped 27 percent for the 38 companies in the Standard & Poor’s 500 Index that have posted second-quarter earnings. That compares with a 32 percent slide in the first quarter and a 56 percent slump in the final quarter of last year.

National benchmark indexes climbed in all of the 18 western European markets except Austria, Luxembourg and Iceland.

The UK’s FTSE 100 and France’s CAC 40 added 0.6 percent. Germany’s DAX increased 0.4 percent.

UBS AG strategists Nick Nelson and Matthew Gilman raised their year-end forecast for region’s FTSEurofirst 300 Index to 1,000 from 900 on Friday, citing an improvement in earnings and economic indicators. The gauge closed at 870.56 on Friday.

Sandvik added 7.1 percent to 64.50 kronor. The company posted a second-quarter operating loss of 2 billion kronor (US$260 million) on falling orders and one-time costs. In June, it predicted a loss of 2.2 billion kronor to 2.5 billion kronor.

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