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Sun, Jul 26, 2009 - Page 10 News List

Europe rallies for second week amid recovering results

BLOOMBERG

European stocks gained for a second week after companies from Roche Holding AG to Vodafone Group PLC reported better-than-estimated results, suggesting the economic slump is easing.

Roche, the world’s biggest maker of cancer medicines, and Vodafone, the largest ­mobile-phone company, advanced more than 6 percent. Rio Tinto Group, the third-biggest mining company, led gains among raw-material producers as base metals climbed. Lloyds Banking Group PLC surged 16 percent on signs the UK housing market is stabilizing.

The Dow Jones STOXX 600 Index rose 4.3 percent in the past week to 219.67 as all 19 industry groups advanced. The benchmark index for European equities has rallied 11 percent since July 10 as US companies from Goldman Sachs Group Inc to Johnson & Johnson and Apple Inc posted results that exceeded analysts’ forecasts. The gauge completed a nine-day rally on Thursday, the longest stretch of gains since 2006.

“The earnings season started very well in the US,” said Manfred Hofer, head of equity analysis at LGT Capital Management in Pfaeffikon, Switzerland, which oversees about US$73 billion. “The results have surprised positively because companies have carried out cost cutting and that has paid off but sales still leave something to be desired.”

More than half of earnings at European companies that have reported results since July 8 beat analyst forecasts, according to Bloomberg data.

Profits have shrunk 28 percent in the period for companies on the STOXX 600, while 37 of 69 companies have reported better-than-­estimated results, the data show.

Among the 181 companies in the Standard & Poor’s 500 Index that have posted second-quarter results, 75 percent beat the average analyst forecast, according to data compiled by Bloomberg. That would be the highest full-quarter figure on record, Bloomberg data going back to 1993 show.

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