European stocks advanced as better- than-estimated earnings from BNP Paribas SA and Swiss Reinsurance Co. overshadowed concern that government debt may harm the economic recovery. U.S. index futures rose.
BNP Paribas, France’s largest bank, climbed 3.1 percent and Swiss Re, the world’s second-biggest reinsurer, rallied 6.3 percent. Alcatel-Lucent SA tumbled 4.9 percent after reporting a net loss of more than double analysts’ estimates. William Morrison Supermarkets Plc slid 1.8 percent after the U.K. retailer reported a slowdown in sales growth.
The Stoxx Europe 600 Index rose 0.3 percent to 251.37 at 9:49 a.m. in London, having swung between gains and losses at least nine times. The benchmark gauge for European equities has retreated 7.6 percent from this year’s high on April 15 amid speculation that a 110 billion-euro ($140 billion) rescue package for Greece will need to be extended to Spain and Portugal.
“While there is plenty of reason for concern, most European countries are a long way away from junk status and we are experiencing a recovery in GDP growth,” London-based UBS AG strategists Karen Olney and Nick Nelson wrote in a report to clients today. “We think this is a good backdrop for buy opportunities in Europe, especially for companies which benefit from a weaker euro.”
U.S., Asian Shares
Futures on the Standard & Poor’s 500 Index expiring in June advanced 0.2 percent today before a report on jobless claims. The MCSI Asia Pacific Index slumped 2.4 percent, erasing this year’s gains.
The European Central Bank’s Governing Council is meeting today in Lisbon, the latest capital to be hit by the fiscal meltdown that’s shaking the foundations of Europe’s monetary union. All 58 economists in a Bloomberg News survey expect the ECB to leave its benchmark interest rate at a record low of 1 percent today. It announces the decision at 12:45 p.m. local time and ECB President Jean-Claude Trichet holds a press conference 45 minutes later.
The “ECB meeting is interesting not for the rate decision but for what will be said this afternoon at the press conference,” said Stephen Pope, London-based chief global equity strategist at Cantor Fitzgerald. “So far, even with the greatest respect, the ECB and Mr Trichet have not been very impressive. How could he say the euro is intact and there is no contagion risk?”
The U.K.’s FTSE 100 Index rose 0.2 percent today as the country votes in an election that polls show may produce no parliamentary majority for the first time since 1974.
Europe’s biggest fund managers say the highest volatility since July makes investing in the region too dangerous even as shares are trading at a 13 percent discount to global stocks.
“We’re not buyers,” said Romain Boscher, head of equities at Groupama Asset Management in Paris, which oversees $120 billion. “If you have a one-year vision, it’s time to buy, but if your vision is one month, it’s too early. Volatility will remain very strong. The market risks reaching lower points.”
Trading of bearish options on an exchange-traded fund tracking European stocks surged to a record yesterday after a single transaction betting on a 12 percent drop by July.
BNP Paribas gained 3.1 percent to 49.27 euros after posting first-quarter net income of 2.28 billion euros. That beat the 1.63 billion-euro median estimate of 11 analysts surveyed by Bloomberg.
Swiss Re Gains
Swiss Re surged 6.3 percent to 47.4 Swiss francs. The company said first-quarter profit increased 22 percent as higher investment income countered claims from the Chile earthquake and European winter storm Xynthia. Net income rose to $158 million from $130 million in 2009, beating the $139 million average estimate of six analysts surveyed by Bloomberg.
Alcatel, the largest French telecommunications equipment producer, plunged 4.9 percent to 2.15 euros after its first- quarter net loss widened to 515 million euros from 402 million euros in the year-earlier period. Analysts had predicted a loss of 244.4 million euros, according to a Bloomberg survey.
Morrison, the smallest of the U.K.’s four main grocers, dropped 1.8 percent to 273.7 pence. Sales at stores open at least a year increased 0.8 percent, excluding fuel and value- added tax, in the 13 weeks ended May 2, the Bradford, England- based company said. That missed the 2 percent median estimate of six analysts surveyed by Bloomberg News.
Axa SA lost 1.9 percent to 13.22 euros. Europe’s second- largest insurer by market value reported first-quarter revenue of 27.9 billion euros, compared with the 28.2 billion-euro median estimate of seven analysts surveyed by Bloomberg.
Life and savings new business value, a measure of the present value of future profits expected from long-term life or pension policies, rose 35 percent to 317 million euros. That missed analysts’ estimate of 336 million euros.
A U.S. Labor Department report at 8:30 a.m. in Washington may show initial claims for jobless benefits fell by 8,000 last week to 440,000, according to a Bloomberg survey of economists. The May non-farm payrolls report is scheduled for release tomorrow.
A separate report today may show the productivity of U.S. workers probably rose in the first quarter at the slowest pace in a year as employers took on staff to meet growing demand.