European Stocks Advance Amid China Stimulus Speculation

By Sarah Jones - Sep 3, 2012 4:50 PM GMT+0800

European stocks rose for a second day, led by basic-resources companies, as an unexpected decline in Chinese manufacturing boosted speculation the government will announce further stimulus. U.S. index futures and Asian shares were little changed.

BHP Billiton Ltd. (BHP), the world’s biggest mining company, climbed 1.8 percent as copper gained. Davide Campari-Milano SpA (CPR) surged 5.8 percent after agreeing to buy Lascelles deMercado & Co., the Jamaican maker of Appleton rum. Rhoen-Klinikum AG (RHK) sank 21 percent after Fresenius SE decided against reviving a bid for the rival German hospital operator.

The Stoxx Europe 600 Index (SXXP) climbed 0.4 percent to 267.15 at 9:48 a.m. in London. The benchmark gauge has risen 14 percent from this year’s low on June 4 amid speculation central banks will undertake further so-called quantitative easing, or QE, to support the economy.

“We are waiting anxiously for the U.S. to see whether they are going to do QE3, to see what the European Central Bank is going to do and what China is going to do,” Nick Maroutsos, who oversees about $2.9 billion as managing director and co-founder of Sydney-based Kapstream Capital, said in an interview on Bloomberg Television. “’Tis the season for stimulus, in terms of monetary policy as well as fiscal policy.”
Futures on the Standard & Poor’s 500 Index slipped less than 0.1 percent today, as did the MSCI Asia Pacific Index. (MXAP) U.S. markets are closed for the Labor Day holiday.

Trading Volume

The volume of shares changing hands in Stoxx 600 companies was 18 percent lower than the 30-day average, according to data compiled by Bloomberg.

European stocks last week posted their first back-to-back weekly losses since May, as economic data from Japan to Germany added to evidence that global growth is slowing.

A Chinese government survey released on Sept. 1. showed factory output unexpectedly shrank for the first time in nine months in August, fueling speculation policy makers will announce more measures to drive growth. Separate data from the Australian Bureau of Statistics today showed retail sales fell in July by the most in almost two years.

Euro-area manufacturing contracted more than initially estimated in August, suggesting the economy may struggle to avoid a recession in the third quarter. A gauge of manufacturing in the 17-nation euro area based on a survey of purchasing managers was revised to 45.1 from the reading of 45.3 estimated earlier, Markit Economics said today. The index has held for 13 months below 50, indicating contraction.

Debt Auctions

Euro-region nations are this week asking investors to stake more than 20 billion euros ($25 billion) on second-guessing the ECB, selling the most debt in two months before the central bank’s meeting on Sept. 6.
Spain, France, Austria and Belgium return to the market after a monthlong pause, with Germany also selling debt. The auctions take place before the ECB’s meeting in Frankfurt, where President Mario Draghi may reveal details of a new bond-buying program.

A gauge of mining companies was the biggest gainer on the benchmark Stoxx 600, climbing 1.4 percent, as base metals advanced on the London Metal Exchange.

BHP Billiton gained 1.8 percent to 1,868.5 pence. Boliden AB (BOL), Scandinavia’s only copper producer, climbed 1.6 percent to 98.85 kronor. Kazakhmys Plc (KAZ) increased 2.3 percent to 606.5 pence.

Campari Climbs

Campari rallied 5.8 percent to 5.78 euros. The Italian distiller said it will purchase Lascelles deMercado in a deal worth $414.8 million to hasten its push into overseas markets.

Nokia Oyj (NOK1V), which competes with Samsung Electronics Co. in making smartphones that run Microsoft Corp.’s mobile operating system, advanced 4.2 percent to 2.35 euros. Samsung fell in Seoul as Apple Inc. sought a ban on U.S. sales of Galaxy smartphones, deepening their global patent dispute.
ARM Holdings Plc, (ARM) whose chip designs power Apple’s iPhone, declined 2.3 percent to 561 pence after Deutsche Bank AG lowered its recommendation to sell from hold, saying the company is likely to face increased competition.

Rhoen-Klinikum sank 21 percent to 15.01 euros after the company said Fresenius decided against reviving its bid, capping more than four months of jockeying over the top spot in the German hospital market.


To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net