Bloomberg
European Stocks Rally on Earnings; Greek Bonds and Gold Advance
May 12 (Bloomberg) --
European stocks rose to the highest level in more than a week as earnings from A.P. Moeller-Maersk A/S to ING Groep NV topped estimates and Germany’s economy unexpectedly expanded. Greek bonds rallied for a third day.
The Stoxx Europe 600 Index climbed 0.9 percent at 10:23 a.m. in London as 18 of its 19 industry groups gained. Maersk, the owner of the world’s largest container-shipping line, surged 7.8 percent in Copenhagen. Futures on the Standard & Poor’s 500 Index were little changed after a report that Morgan Stanley is being probed by U.S. federal prosecutors. Greek two-year notes rose following the near $1 trillion bailout announced by the European Union over the weekend. Gold advanced to a record.
About 65 percent of the companies in the MSCI World Index that reported quarterly earnings since April 12 beat analysts’ projections, according to data compiled by Bloomberg. Europe’s economy expanded at a faster pace than forecast in the first quarter, the EU’s statistics office in Luxembourg said today. Gold advanced as concern lingered that Europe’s most indebted countries will struggle to reduce their deficits.
“We have been in the sweet spot of the earnings cycle,” analysts including Leon Cornelissen at Robeco Groep NV in Rotterdam wrote in a report today. “The world economy is showing surprising strength, but general monetary tightening in emerging markets and increasing worries about the sustainability of government debt policies” are damping risk appetite, they wrote.
Maersk Rises
The MSCI World advanced 0.4 percent. Maersk rose the most in more than a year after saying it returned to profit as freight rates jumped and global trade picked up. ING, the largest Dutch financial services company, rallied 6.8 percent in Amsterdam after reporting a better-than-estimated profit as bad loans fell. UniCredit SpA, Italy’s biggest bank, gained 2.5 percent in Milan after saying earnings rose 16 percent on higher trading income. ThyssenKrupp AG, Germany’s largest steelmaker, advanced 1.3 percent in Frankfurt after saying it returned to profit as demand for the metal improved.
U.S. futures were little changed after the S&P 500 declined 0.3 percent yesterday. Morgan Stanley fell 1.8 percent in German trading, after the Wall Street Journal reported that U.S. federal prosecutors are investigating some of the bank’s transactions in so-called collateralized debt obligations, citing people familiar with the matter. Chief Executive Officer James Gorman, speaking at a press conference in Tokyo today, said there is “no substance” to any allegations.
Trade Deficit
The trade deficit in the U.S. probably widened in March to the highest level in two years as the cost of imported oil climbed and companies restocked shelves with goods bought abroad, economists said before a report from the Commerce Department due at 8:30 a.m. in Washington today.
The MSCI Asia Pacific was little changed. Mitsubishi UFJ Financial Group Inc., which holds about 20 percent of Morgan Stanley, sank 2.4 percent in Tokyo. China Resources Land Ltd., a property developer, lost 4.4 percent in Hong Kong. Posco, South Korea’s largest steelmaker, declined 2.5 percent.
The yen weakened against all but one of its 16 most-traded counterparts, dropping 0.3 percent against the dollar, amid demand for high-yielding currencies. The euro jumped 0.6 percent versus the dollar.
The pound fell after Bank of England Governor Mervyn King said risks to U.K. growth increased and further asset purchases haven’t been ruled out. Sterling fell 0.1 percent against the dollar and weakened 0.4 percent versus the euro.
Greek Bonds
Gains for the Greek two-year note drove the yield 42 basis points lower to 7.64 percent. The yield on the Portuguese 10- year bond climbed 3 basis points to 4.52 percent after the government sold 1 billion euros ($1.3 billion) of the securities in the first test of investor demand since the EU’s bailout package was announced.
Gold for immediate delivery rose to a record $1,242.03 an ounce and was at $1,231.90 an ounce. Corn futures in Chicago were up 1.1 percent at $3.8125 a bushel on the Chicago Board of Trade, the highest price since March 23. China, the world’s second-largest user of the grain after the U.S., bought 300,000 metric tons of U.S. corn from an international trading house, two traders with knowledge of the matter said.
West Texas Intermediate crude oil for June delivery was little changed at $76.15 a barrel in New York while London- traded North Sea Brent crude was up 0.5 percent up at $80.87.
The Micex Index in Russia, the world’s largest energy exporter, jumped 2.8 percent for the biggest gain among global equity gauges. Stock indexes in Poland and the Czech Republic climbed 1.2 percent as Germany’s economic expansion improved the outlook for exports. Poland’s currency strengthened 0.6 percent against the euro after the finance ministry said it bought zloty on the spot market. The MSCI Emerging Markets Index climbed 0.3 percent.
To contact the reporter on this story: David Merritt in London on
dmerritt1@bloomberg.net
Last Updated: May 12, 2010 06:10 EDT