By Barbara Kollmeyer, MarketWatch
European stocks jumped higher on Thursday, taking their cues
from Wall Street, which extended gains into a third day on upbeat
data. Resource stocks providing a big push for markets, though
chemical stocks fell on a downgrade.
The Stoxx Europe 600 index rose 0.2 to 285.04, following a rise
of 1.7% on Wednesday, which was its second-consecutive gain.
Among the biggest gainers, shares of Alcatel-Lucent rose over
5%. In a note on Thursday, Morgan Stanley reiterated its overweight
recommendation on the stock, saying the company's recent issuance
of a EUR630 million ($820 million) convertible bond is positive for
equity holders.
On the downside, shares of Subsea 7 SA tumbled 14% after the
Norwegian oil-field services group gave an update on its
anticipated losses for an offshore Brazil project. As a result, the
company said it no longer expects full-year adjusted earnings
before interest, taxes, depreciation and amortization to progress
compared with 2012.
The most dramatic action was seen in Greece, where the ASE
Composite index tumbled 3.4% to 808.27, led by a 29% slump for the
National Bank of Greece SA (NBG). Markets fell after a report in
the Financial Times suggested the country's bailout program was
running out of cash due to a finance gap.
European finance ministers reached an agreement early Thursday
on rules for winding down insolvent banks, inking a deal in which
banks' shareholders, creditors and big depositors would take the
first hit in the event of a bank crisis. The deal still needs
legislative approval from the European Parliament.
A slew of U.S. data underpinned gains for most of Europe's
markets, which were sluggish earlier in the day. Weekly jobless
claims fell and personal spending and incomes rose in May, which
helped Wall Street extend gains into a third day.
"I think investors are now gearing portfolios for the U.S.
economic recovery, picking growth focused assets which include
large-cap European stocks exposed heavily to the U.S. recovery --
construction, housing stocks/Industrials and auto makers," said
Ishaq Siddiqi, market strategist at ETX Capital, in emailed
comments.
From Europe, German unemployment numbers for June dropped
unexpectedly, while euro-zone confidence numbers rose to the
highest in a year. (Read more about the data
http://www.marketwatch.com/story/euro-zone-confidence-rises-to-highest-in-year-2013-06-27.)
Upbeat day for London, chemicals take a broker hit
The best gains in Europe were found in London, where the FTSE
100 index jumped 0.9% to 6,222.46, as resource stocks pushed
higher. Shares of Royal Dutch Shell PLC (RDSA) added to earlier
gains, up 1.8%, while miner BHP Billiton PLC rose 1%.
"Miners had a horrid day yesterday on drop in gold prices but
the stabilization in commodity prices today has prompted a
rebound," said Siddiqi said.
Leading the gains in London, shares of WPP PLC jumped over 3%
after Bank of America/Merrill Lynch added the media group to its
most preferred list, citing an "attractive combination of value and
growth."
Smiths Group PLC rose 2.8% after a lift to buy from neutral at
UBS, which said shares are not reflecting upside from a potential
sale of its medical division.
Also lower were a handful of chemical companies. J.P. Morgan
Cazenove made several cuts to the sector, saying "after three years
of tailwinds, the good times may be over," and potential headwinds
lie ahead. BASF SE , Lanxess AG and Solvay SA were cut to
underweight from neutral.
Those shares were off 2.7%, 4%, and 2.8% respectively.
The German DAX 30 index shook off a flat start to gain 0.6% to
7,987.02. Leading gains, shares of sports gear maker Adidas AG rose
3% after a Barclays upgrade to overweight from equal weight.
Barclays said Adidas continues to look attractive relative to
peers, brushing off worries over emerging-markets exposure.
The French CAC 40 index rose nearly 1% to 3,761.54, with shares
of heavyweight oil group (TOT) gaining 1.3% on the heels of higher
oil prices. Drugmaker Sanofi SA (SNY) climbed nearly 2%, also
lifting the index.
In Spain, shares of Bankia SA jumped 2.7% after it sold its
stake in International Consolidated Airlines Group SA for 675
million euros ($879 million). Shares of IAG fell 1.5% in
London.
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