European stocks had their first weekly gain since May after US banks including Citigroup Inc reported earnings that beat estimates and a more than 10 percent decline in oil prices boosted automakers and travel companies.
Anglo Irish Bank PLC and Swedbank AB led banks higher after Citigroup, the biggest US bank by assets, posted a smaller-than-estimated second-quarter loss. Ryanair Holdings PLC, Europe’s biggest discount airline, and Volkswagen AG rallied as oil had its steepest weekly drop in more than three years. Alliance & Leicester PLC surged after Banco Santander SA agreed to buy the UK lender.
Europe’s Dow Jones STOXX 600 Index rose 3.8 percent in the week to 280.69, reducing its loss so far this year to 23 percent. The MSCI World Index slid into a bear market last week as oil rose to a record and Fannie Mae and Freddie Mac, the two biggest mortgage-finance companies, plunged on concern they didn’t have enough capital to survive the housing slump.
“The panic we saw at the beginning of this week gave way to a more realistic view that the banking apparatus won’t break down,” said Robert Halver, head of research at Baader Bank in Frankfurt.
“The decline in oil prices and takeovers supported the market,” said Stefan Raetzer, a fund manager at Allianz Global Investors in Frankfurt, who helps oversee US$28 billion. “What we saw was investors shifting from those sectors that have performed very well recently, like basic resources, to those that have suffered a lot, including automakers.”
National benchmarks gained in 15 of the 18 western European markets. Germany’s DAX Index added 3.7 percent, and France’s CAC increased 4.9 percent.
The UK’s FTSE 100 advanced 2.2 percent. The STOXX 50 added 2.9 percent and the Euro STOXX 50, a measure for the euro region, increased 3.9 percent.
European banking shares posted their first weekly gain in 11 weeks, with the benchmark for the industry rising 9.4 percent.
Anglo Irish, Ireland’s third-largest bank, climbed 22 percent and Bank of Ireland PLC, the country’s second-largest bank by market value, jumped 20 percent.
Ireland’s banks are “very well capitalized” and don’t need government aid even after a housing slump sent shares to the lowest in more than a decade, Irish Prime Minister Brian Cowen said in a Bloomberg Television interview in New York on Thursday.
Swedbank surged 22 percent. The largest bank in the Baltics reported second-quarter profit increased 16 percent after lending income rose in Sweden, Estonia, Latvia and Lithuania.
“The market seems oversold globally,” said Franz Wenzel, Paris-based deputy director for investment strategy at Axa Investment Managers, which oversees about US$831 billion. “We need the leader of the pack — the US. Without it, we’re going nowhere. The most important thing in the US is earnings.”
Ryanair increased 27 percent this week and British Airways PLC, Europe’s third-biggest carrier, gained 22 percent following oil’s slide.
Volkswagen, Europe’s largest carmaker, rose 12 percent. Renault SA, France’s second-biggest auto producer, climbed 14 percent.
Alliance & Leicester jumped 50 percent. Banco Santander, Spain’s biggest bank, agreed to acquire the UK mortgage lender for £1.26 billion (US$2.6 billion), less than half the company’s market value at the end of last year.
Continental AG added 33 percent. Europe’s second-biggest tiremaker received an unsolicited 11.2 billion-euro (US$17.7 billion) takeover approach from Schaeffler Group.
Schaeffler, an engineering company owned by billionaire Maria-Elisabeth Schaeffler and her family, offered at least 69.37 euros a share and said it’s seeking a minority stake, a strategy that would echo Porsche SE’s purchase of 31 percent of Volkswagen AG last year.
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
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