European Stocks Climb to 12-Month High; STMicro, Rio Tinto Gain
By Adria Cimino
Oct. 14 (Bloomberg) -- European shares climbed to the highest level in more than a year as results from Intel Corp. and JPMorgan Chase & Co. beat analysts’ estimates and the decline in China’s exports slowed.
STMicroelectronics NV, Europe’s biggest chipmaker, and Infineon Technologies AG, the second-largest, gained at least 2.6 percent after Intel’s sales forecast surpassed projections by as much as $1 billion. Rio Tinto Group led mining companies higher after its iron ore production increased. BASF SE jumped 7.4 percent as the world’s largest chemicals company said earnings topped estimates.
The Dow Jones Stoxx 600 Index rallied 2.1 percent to 246.98, the highest close since Oct. 3, 2008. A 56 percent rally from this year’s low on March 9 has pushed the gauge’s valuation to more than 47 times earnings, near the most expensive level since 2003, weekly data compiled by Bloomberg show.
“Third-quarter earnings are surprising on the upside,” Vincent Juvyns, a Brussels-based equity strategist at ING Investment Management, which oversees about $476 billion, said in a Bloomberg Television interview. “That’s support for the equity market. We think the bottom for earnings is behind us.”
All but one of the 17 companies in the U.S. Standard & Poor’s 500 Index that have reported quarterly results since Oct. 7 topped estimates, according to data compiled by Bloomberg.
National benchmark indexes increased in all of the 18 western European markets. The U.K.’s FTSE 100 added 2 percent and Germany’s DAX gained 2.5 percent. France’s CAC 40 advanced 2.1 percent as Credit Agricole SA rallied.
Chinese Exports
China’s exports declined at the slowest pace in nine months in September. Shipments dropped 15.2 percent to $115.9 billion from a year earlier, the customs bureau said. The median estimate of 23 economists surveyed by Bloomberg News was for a 21 percent decline. In August, exports slid 23.4 percent.
Sales at U.S. retailers fell less than anticipated in September, a sign households will play a greater role in the emerging economic recovery, figures from the Commerce Department in Washington showed today.
U.K. unemployment rose by the least in a year and fewer people signed on for jobless benefits than economists forecast as the recession eased, according to data from the Office for National Statistics.
STMicroelectronics advanced 2.6 percent to 6.83 euros and Infineon gained 4 percent to 4.02 euros as Intel predicted fourth-quarter revenue of as much as $10.5 billion, topping the $9.5 billion average estimate in a Bloomberg survey. The company’s gross margin -- a measure of profitability -- may reach the highest level this decade.
‘More Sustainable Recovery’
Intel’s “better-than-expected numbers show one of the first major companies to report a more sustainable recovery instead of heavily cutting costs,” James Hughes, a market analyst at CMC Markets in London, wrote.
Credit Agricole, France’s largest lender by branches, added 4.1 percent to 15.03 euros after saying it will reimburse 3 billion euros ($4.5 billion) it borrowed from the state last year as credit markets improve.
JPMorgan, the second-biggest U.S. bank by assets, posted third-quarter profit of 82 cents a share as fixed-income revenue surged. Analysts surveyed by Bloomberg had estimated 51 cents.
Rio Tinto added 5.3 percent to 2,998 pence. The world’s third-largest mining company raised its 2009 forecast for iron ore output by as much as 7.5 percent as demand from steelmakers recovers.
Basic Resources
A gauge of basic-resources shares soared 5.2 percent, the biggest gain among the 19 industry groups in the Stoxx 600, as metals climbed in London. Eramet SA, operator of the world’s biggest ferronickel plant, rallied 6.3 percent to 267.85 euros. Xstrata Plc, the world’s fourth-largest copper supplier, jumped 7.7 percent to 1,031 pence and Kazakhmys Plc, Kazakhstan’s biggest copper producer, advanced 9.4 percent to 1,289 pence.
BASF rallied 7.4 percent to 40.61 euros after saying third- quarter earnings and sales topped analysts estimates as cost cuts took hold and demand from China led a “slow” and “fragile” industry recovery.
Clariant AG, the world’s largest maker of chemicals used in printing ink, rallied 7.3 percent to 11.03 Swiss francs.
BP Plc, Europe’s second-biggest oil company, climbed 2.2 percent to 559 pence as crude rose to a one-year high in New York on optimism the global economic recovery will boost energy demand. Royal Dutch Shell Plc, the region’s largest oil company, advanced 2.4 percent to 1,866.5 pence.
Cairn Energy
Cairn Energy Plc rallied 8.6 percent to 3,050 pence, the second-biggest advance on the Stoxx 600. The U.K.-listed oil explorer entered into a farm-out agreement with Petronas International Corp. for Greenland blocks and said its Cairn India Ltd. unit completed financing of $1.6 billion for its Rajasthan oil field project.
Pernod Ricard SA retreated 3.5 percent to 53.71 euros. The world’s second-largest distiller was cut to “underperform” from “neutral” at Exane BNP Paribas, which said “we believe there is a risk of further weakness in volumes and declining spirits prices.”
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
