Markets bounce back from six days of losses

Eurostoxx 50: 2,778.12 (+26.06) Frankfurt DAX: 7,159.66 (+99.43) Paris CAC: 3,878.65 (+40.67)EUROPEAN STOCKS rebound from a 2½-month low yesterday after six days of losses pushed valuations to near the cheapest in two years, the US trade deficit narrowed and traders pared bets on the pace of interest-rate increases.

The Stoxx Europe 600 Index advanced 1 per cent to 271.76 at the close in London.

“We see buying opportunities at these levels,” said Arnaud Scarpaci, a fund manager at Agilis Gestion in Paris.

“The US trade balance was encouraging,” he said.

The US trade deficit unexpectedly narrowed in April, reflecting a plunge in auto and oil imports combined with record exports. The gap shrank 6.7 per cent to $43.7 billion, the lowest since December, figures from the Commerce Department showed.

The European Central Bank kept its benchmark interest rate at 1.25 per cent yesterday, while the Bank of England held its key rate at 0.5 per cent and left its bond-purchase program unchanged at £200 billion.

The euro weakened and German government bonds fell as ECB president Jean-Claude Trichet said the bank has not raised its 2012 inflation forecast from 1.7 per cent.

Syngenta, a maker of crop protection chemicals, gained 2 per cent to 285.9 Swiss francs and Yara, the largest maker of nitrogen fertilisers, jumped 1.9 per cent to 335.1 kroner.

BASF rose 2.8 per cent to €64.

Elekta rallied 3.9 per cent to 268.5 kronor as the maker of radiation-treatment equipment said fourth-quarter net income rose to 531 million kronor from 476 million kronor a year earlier.

Suez Environnement rose 2.1 per cent to €14.29 as JPMorgan upgraded Europe’s second-largest water company.

Fortum Oyj, Finland’s biggest utility, rose 3.4 per cent to €23.14.

Elan jumped 5.7 per cent to €7.18 for the biggest gain in the Stoxx 600.

Club Mediterranee surged 5.1 per cent to €16.14. The French holiday resort operator said first-half net income rose to €10 million from €3 million.

Home Retail fell 14 per cent to 174.5p, the biggest drop since it split from GUS in October 2006.

Dixons Retail, Europe’s largest electronics retailer, plunged 8.9 per cent to 17.58p. – (Bloomberg)