Markets rally on positive US data

EUROPEAN MARKETS ended a mid-week losing run yesterday after data showing that more people than expected bought new homes in US and consumer confidence in the world’s biggest economy is strong.

DUBLIN

IN DUBLIN, insulation and building technology specialist, Kingspan, which is due to kick off a week of preliminary results reporting on Monday, was one of the stronger performers, adding 3.3 per cent to close at €7.98.

In a related sector, building materials giant, the Dublin market’s biggest stock, CRH, which publishes its results on Tuesday, was a little quieter, gaining just 0.87 per cent to close at €16.22.

This was notwithstanding the fact that good news from the US economy is a positive for the Irish giant, which last year drew half its €17 billion sales from North America.

Of the market’s other big players, packaging group, Smurfit Kappa, dipped 0.13 per cent to end the week at €7.59.

LONDON

LONDON’S BLUE chip index closed down 2.76 points, or 0.1 per cent, at 5,935.13.

Part state-owned British bank Lloyds, down 2.3 per cent, was forced to push back key targets of its turnaround plan and warned a tough economic outlook would hit revenue after plunging to a £3.5 billion yearly loss.

Lloyds’ results came a day after Royal Bank of Scotland, down 0.7 per cent, reported its fourth straight annual loss.The banking sector is up about 22 per cent in 2012, supported by central banks stepping in to prop up the financial system, but Barclays Capital turned bearish on European banks, downgrading them to “underweight” ahead of the second tranche of the European Central Bank’s long-term refinancing operation next week.

EUROPE

EUROPEAN STOCKS climbed, snapping a three-day drop for the Stoxx Europe 600 Index, as companies from Telecom Italia SpA to Eiffage SA said they will cut their debt in 2012 and house sales in the US beat economists’ estimates.

The Stoxx 600 rose 0.3 per cent to 264.83 at 4.30pm in London as more than two stocks climbed for every one that dropped. The gauge has still fallen 0.4 per cent this week.

The Stoxx 600 slid for a third day on Thursday after the European Commission warned that the euro area’s economy will shrink this year, dragged down by Italy and Spain. The gauge has climbed 8.3 per cent so far this year buoyed by US economic reports that topped forecasts.

“European fourth-quarter earnings have been very mixed so far,” said Ioan Smith, a director at Knight Capital Europe Ltd in London.

“A very small percentage have beaten top- and bottom-line estimates while offering better guidance. Given the weak macro backdrop, it appears many have adopted conservative stances.”

Germany’s DAX Index gained 0.8 per cent, while France’s CAC 40 Index rose 0.7 per cent.

Some 10 companies on the Stoxx 600 were scheduled to report financial results today. Of the 212 that have reported quarterly earnings so far, 108 have missed analyst estimates, while 92 have beaten them, according to data compiled by Bloomberg.

Telecom Italia jumped 6.8 per cent to €86.7 after the company forecast a bigger-than-estimated reduction of debt this year, as well as stable earnings and revenue.

Eiffage surged 16 per cent to €29.51 after chief executive officer Pierre Berger said the French builder’s net income and revenue will climb in 2012 as it improves the operating margins at its contracting units. The company plans to trim its debt by €2 billion in five years. Natixis upgraded the shares to “buy” from “neutral”.

SAP advanced 1.5 per cent to €50.29 after the biggest maker of business-management applications said its executive board has recommended an 83 per cent increase of its dividend after a record year.

Part of the proposed €1.10 payout is a 35-cent one-off dividend to mark SAP’s 40th anniversary, while the regular dividend will increase by 25 per cent. If approved, it would cost €1.3 billion, the company said yesterday.

Cove Energy surged 21 per cent to 235p after PTT Exploration Production offered £1.1 billion ($1.8 billion) to buy the UK explorer focused on East Africa, trumping an earlier bid by Royal Dutch Shell.

US

US STOCKS rose, sending the Standard & Poor’s 500 Index above its highest close since 2008, as better-than-estimated con-sumer sentiment and home sales reports bolstered confidence in the world’s largest economy.

The S&P 500 increased 0.11 per cent to 1,364.97 New York time. The benchmark gauge for American equities exceeded its April 2011 peak of 1,363.61.

The Dow Jones Industrial Average fell 17.18 points, or 0.13 per cent, to 12,967.51 yesterday. – (Additional reporting, Bloomberg/Reuters)