European Banks Postpone Their Diet

European banks pledged last year to cut more than $1.2 trillion of assets—about 3 percent of their total—to help them weather the sovereign-debt crisis. Bank executives said they would sell divisions and loans and rein in lending to reduce short-term funding needs and increase capital. Instead, the banks have grown fatter.

Lenders in the euro area increased assets by 7 percent to €34.4 trillion ($45 trillion) in the year ended July 31, according to data compiled by the European Central Bank. BNP Paribas (BNP) and UniCredit (UCG), the biggest banks in France and Italy, expanded their balance sheets in the 12 months through the end of June.

They have ECB President Mario Draghi to thank. His decision nine months ago to provide more than €1 trillion in three-year loans to regional banks eased the pressure to sell assets at depressed prices. The infusion, designed to encourage banks to lend, succeeded in averting a short-term credit crunch by reducing their reliance on markets for funding. It also may be making European lenders dependent on more aid from the central bank. “Deleveraging isn’t taking place, especially in Spain and Italy,” says Simon Maughan, a bank analyst at Olivetree Securities in London. “The fact that we haven’t got on with it, or very slowly, suggests that when the time comes we’ll need another ECB injection to roll over the first one.”

Analysts had expected that European lenders would have to shrink as regulators requested higher capital, and investors, who became less convinced that governments would be able or willing to bail out their largest banks, demanded bigger returns for lending to those firms. The International Monetary Fund forecast in an April report that banks would shrink by as much as $3.8 trillion and curb lending. The IMF estimates such cutbacks could reduce euro-area gross domestic product by 1.4 percent.

Thanks to the ECB program, lending to households and companies in the euro area held steady this year. Total loans rose to €18.6 trillion as of July 31 from €18.5 trillion at the end of 2011, according to data from the ECB. The central bank said in its monthly report released Sept. 13 that the “supportive impact” of the longer-term refinancing operation, or LTRO, “prevented abrupt and disorderly deleveraging, which could have had severe consequences for the economy.”

Some lenders used the ECB’s loans to purchase sovereign bonds. Since they earn more on the bonds than they pay on the loans, banks can reap about €12 billion of profit a year, according to estimates by Nikolaos Panigirtzoglou, an analyst at JPMorgan Chase (JPM) in London. For lenders in southern European countries, that strategy could backfire. Prices of bonds sold by the governments of Spain and Portugal fell to record lows this year because of concern on the part of investors that those nations would require bailouts.

Banks have sought to sell performing loans, which carry higher prices, or some of their best businesses, to avoid taking too big a loss. Societe Generale (GLE) sold its U.S. asset-management unit, TCW Group, last month to private equity firm Carlyle Group (CG) for less than the $880 million the bank paid for it in 2001, according to people familiar with the transaction. The Paris-based lender also is close to selling €800 million of mortgages to insurer Axa’s real estate unit at a discount of less than 10 percent of face value, people with knowledge of the deal said last month. “We have started the disposal program, and we’re going to carry on that in the next few quarters,” said Societe Generale Chief Executive Officer Frederic Oudea in a Sept. 12 interview.

Other banks are moving far more cautiously. The delays could lead to what Alberto Gallo, a London-based analyst at Royal Bank of Scotland (RBS), calls the “Japanification” of the banking system, a prolonged period during which lenders are slow to clean up their balance sheets. “We’ve gone from a risk of an accelerated deleveraging to the opposite,” he says. “It’s a better scenario for the economy, although it shouldn’t translate into complacency.”

The bottom line: After pledging to shrink their balance sheets by $1.2 trillion, European banks increased assets to $45 trillion in the year through July.

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European Stocks Gain This Week, Pare First Annual Loss Since ’08

January 02, 2012, 2:39 AM EST By Adam Haigh

Dec. 31 (Bloomberg) -- European stocks climbed in the last week of 2011 as U.S. data showed the recovery in the world’s largest economy is gathering pace and optimism grew that euro- area policy makers will contain the debt crisis.

Banco Comercial Portugues SA and Banco Espirito Santo SA, Portugal’s largest lenders, jumped more than 15 percent after a report that the government may recapitalize the banks without becoming a shareholder. Britvic Plc led food and beverage producers higher, extending this year’s gains for the industry.

The benchmark Stoxx Europe 600 Index rose 1.1 percent to 244.54, the highest since Oct. 28. The second-straight week of gains helped trim this year’s losses to 11 percent. The gauge has rallied 14 percent from this year’s low on Sept. 22 as euro- area leaders planned to channel central-bank loans through International Monetary Fund to debt-ridden nations and the European Central Bank took steps to ease a cash squeeze.

“There is a risk of losing sight that gradually progress has been made,” said William De Vijlder, who oversees $778 billion as the global chief investment officer of Paris-based BNP Paribas Investment Partners. “The ECB has eased its policy. The firepower of the IMF is being increased.”

Reports this week showed business activity in the U.S. expanded more than forecast and confidence among American consumers rose in December to the highest level in eight months.

Dwindling Volumes

Post-Christmas trading was slow, with daily volume in the Stoxx 600 this week dipping to 32 percent of this year’s average, according to data compiled by Bloomberg.

The Stoxx 600 gained 5.6 percent from the start of the year to its peak on Feb. 17. From there, the index tumbled 26 percent to its low on Sept. 22, entering a bear market. The gauge had its worst third quarter since 2002, dropping 17 percent, as U.S. leaders wrangled over deficit cuts and European policy makers remained divided on their response to the debt crisis.

An Oct. 26 agreement to bolster the region’s bailout fund, the European Financial Stability Facility, stalled as Germany and France differed over how tackle the crisis. France called for using the ECB as a backstop, while Germany rejected it. Chancellor Angela Merkel listed using the ECB as the lender of last resort, issuing joint euro-area bonds and going in for a “snappy debt cut” as unworkable proposals.

Lenders Lead Losses

Banks had the biggest drop among 19 industry groups this year, sinking 32 percent, amid growing concern that the fiscal crisis will force at least one nation to default on its debt. Health-care and food stocks advanced as investors sought companies whose earnings are less tied to economic growth.

The decline in European equities compares with an 17 percent tumble in the MSCI Asia Pacific Index and a 0.4 percent gain in the S&P 500 at the close on Dec. 29.

Banco Comercial Portugues advanced 16 percent to a two- month high. Chinese banks may be interested in investing in the lender, news agency Lusa reported citing Cao Guangjing, chairman of China Three Gorges Corp.

Banco Espirito Santo rose 15 percent. Portugal may recapitalize the country’s banks without becoming a shareholder, Jornal de Negocios reported, without saying where it got the information. The state may subscribe contingent convertible bonds sold by the banks, the newspaper said. So-called CoCos are bonds that convert into equity if a bank’s capital drops below a set level.

Britvic rallied 4.7 percent. Unilever climbed 1.6 percent. Nestle SA added 1.5 percent.

Rio Tinto Group declined 1 percent, as copper slid on the London Metal Exchange this week.

--With assistance from Adria Cimino in Paris. Editors: Srinivasan Sivabalan, Andrew Rummer

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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Sumitomo Mitsui Eyes European Banks’ $90 Billion in Asset

December 30, 2011, 9:18 PM EST By Shigeru Sato and Takako Taniguchi

(Updates with closing share price in seventh paragraph.)

Dec. 30 (Bloomberg) -- Sumitomo Mitsui Financial Group Inc., Japan’s second-biggest bank by market value, plans to buy “several hundred billion yen” of assets being sold by European lenders building capital to weather the region’s debt crisis.

The Tokyo-based bank has received 7 trillion yen ($90 billion) in offers from European banks including infrastructure project loans, Koichi Miyata, Sumitomo Mitsui’s president, said in an interview on Dec. 21. Sellers of European banking assets currently outnumber buyers, he said.

“We’ll take time and go for it once we find what we want” Miyata said. “Loans for projects in North America and Asia are the areas we are interested in.”

The euro area’s debt crisis has increased the risk of government and bank defaults, raising credit costs and pushing the region’s biggest lenders, including Spain’s Banco Santander SA and Royal Bank of Scotland Group Plc, to sell assets and boost liquidity. Miyata aims to add 6 trillion yen worth of overseas assets to his bank in next three years to help offset sluggish Japanese loan demand.

Japan’s so-called megabanks, the three biggest lenders led by Mitsubishi UFJ Financial Group Inc., have accelerated overseas lending in the past two years, as the country’s total lending shrank by 1.2 percent in 2009 and 2.1 percent in 2010.

Sumitomo Mitsui’s banking unit increased lending abroad by 16.3 percent to 9.37 trillion yen as of Sept. 30 from a year earlier, it said last month. That compares with the bank’s overall lending balance of 57 trillion yen, a 0.6 percent decline from a year earlier.

European Sales

Shares of the bank rose 0.9 percent to close at 2,144 yen on the Tokyo Stock Exchange today, the last trading day of the year. The stock declined 26 percent in 2011.

Bank of Ireland agreed to sell part of its project finance loans to Sumitomo Mitsui for 590 million euro ($764 million), the Irish lender said in a statement on Nov. 28. The loans relate to a portfolio of infrastructure and energy assets across North America and Europe, according to the statement.

Sumitomo Mitsui’s overseas assets, mostly loans, totaled $122 billion, as of Sept. 30.

France’s BNP Paribas SA and Societe Generale SA, Belgium- based Dexia SA and KBC Groep NV, and Italy’s Intesa Sanpaolo SpA and UniCredit SpA are among lenders seeking buyers for project finance and corporate loans in the Middle East, five bankers who were approached with deals said, declining to be identified because the information is private. The offers were made over the past six months, they said.

Brokerage Expansion

Mitsubishi UFJ last month agreed to buy Royal Bank of Scotland Group Plc’s Australia-based infrastructure advisory business, following the Japanese lender’s 3.9 billion-pound ($6.1 billion) acquisition in 2010 of RBS’s project financing assets.

Sumitomo Mitsui would also consider buying an entire business unit from a European bank, said Miyata. While he didn’t elaborate on specific targets, the bank’s brokerage unit offers expansion opportunities as Japanese companies tap the strong yen to buy operations abroad, Miyata said. He predicts the yen will trade around 78 yen to the dollar next year.

The currency has risen 4.6 percent against the dollar this year to 77.6 yen today in Tokyo.

The bank’s SMBC Nikko unit started merger and acquisition advisory operations in Shanghai in January to win business from Japanese companies moving to faster-growing overseas markets, he said.

Japanese acquisitions abroad have climbed to about $88 billion this year, the most in any of the 12 years for which Bloomberg data is available, and more than double last year’s. Cross-border deals this year include Takeda Pharmaceutical Co.’s $13.7 billion acquisition of Swiss drugmaker Nycomed.

--With assistance from Arif Sharif in Dubai. Editors: James Gunsalus, Nathaniel Espino

To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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European Stocks Rise as U.S. Data Offsets Debt-Crisis Concern

December 26, 2011, 3:15 AM EST By Adam Haigh

Dec. 23 (Bloomberg) -- European stocks rose, capping the first weekly rally since Dec. 2, as U.S. durable-goods orders and new home sales increased, reinforcing optimism that the recovery in the world’s largest economy is gathering strength.

Wavin NV jumped 22 percent after Mexichem SAB raised its bid for the Dutch manufacturer by 11 percent to 10 euros a share. BP Plc led oil and gas producers higher as crude headed for its biggest weekly gain in two months.

The Stoxx Europe 600 Index rose 0.9 percent to 241.83 at the close in London. The gauge has advanced 3.5 percent this week and rebounded 13 percent from this year’s low on Sept. 22 amid optimism that U.S. economic growth is holding firm and euro-area leaders are moving to stem the region’s debt crisis.

“The U.S. is beginning to show signs of life,” said John Haynes, the head of research at Investec Wealth & Investments in London. “There is some positive momentum in the U.S. economy.” He spoke in a Bloomberg Television interview with Mark Barton.

Orders for U.S. durable goods rose in November by the most in four months as an increase in demand for aircraft outweighed declines in spending on computers and equipment.

Bookings for equipment meant to last at least three years rose 3.8 percent after no change in the prior month that was previously reported as a decline, data from the Commerce Department showed today in Washington.

U.S. Property Market

A separate report showed sales of new U.S. homes rose to a seven-month high in November. Purchases of single-family properties increased 1.6 percent to a 315,000 annual pace, pushing the number of new homes on the market to a record low.

Data yesterday showed new unemployment claims unexpectedly fell by 4,000 to 364,000 in the week ended Dec. 17, the lowest level since April 2008.

Despite this week’s rally, the Stoxx 600 has still tumbled 12 percent this year as the crisis spread to Italy and Spain. Banks and commodity companies have posted the largest declines among 19 industry groups on the gauge, both slumping more than 30 percent.

The volume of shares changing hands across Europe has fallen this week as the Christmas holiday break approaches. Trading on the Stoxx 600 this week was 22 percent below the average for 2011, according to data compiled by Bloomberg.

National benchmark indexes climbed in all 18 western- European stock markets. The U.K.’s FTSE 100 Index rose 1 percent, Germany’s DAX gained 0.5 percent and France’s CAC 40 gained 1 percent.

Quantitative Easing

European Central Bank Executive Board member Lorenzo Bini Smaghi said that policy makers shouldn’t shirk from using quantitative easing if deflation becomes a danger to the euro region. Unlike the U.S. Federal Reserve and the Bank of England, the ECB has offset liquidity created by purchases of government bonds so that such operations don’t amount to quantitative easing that stokes inflation.

“I do not understand the quasi-religious discussions about quantitative easing,” Bini Smaghi, who will leave his post at the end of the month, said in an interview published yesterday by the Financial Times. The ECB confirmed the comments. “It is appropriate if economic conditions justify it, in particular in countries facing a liquidity trap that may lead to deflation.”

Wavin soared 22 percent to 9.58 euros as it granted access to Mexichem to carry out due diligence, after the Latin American chemical producer increased its bid for Wavin to 10 euros from 9 euros.

BP rose 2.1 percent to 459.70 pence, while Total SA added 2.1 percent to 38.64 euros. Crude oil climbed for a fifth day in New York, the longest stretch of gains since Nov. 8.

EDP-Energias de Portugal dropped 0.3 percent to 2.32 euros, erasing an earlier gain of 3.7 percent, after Fitch Ratings reaffirmed the company’s long-term credit rating at BBB+. EDP had advanced after Portugal said China Three Gorges Corp. will pick up a stake in the company.

--Editors: Srinivasan Sivabalan, Andrew Rummer

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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Asian Stocks Fall on Economic Data, Before European Debt Summit

December 08, 2011, 6:53 AM EST By Kana Nishizawa and Norie Kuboyama

Dec. 8 (Bloomberg) -- Asian stocks dropped ahead of a European summit on the region’s sovereign debt crisis, and after economic data from Japan and Australia signaled the global economy is slowing.

Tokyo Electric Power Co., the operator of the power plant at the center of the biggest nuclear disaster in 25 years, sank 11 percent after the Mainichi newspaper reported it may be effectively nationalized. LG Electronics Inc., a home appliances maker that gets more than a fifth of its revenue from Europe, fell 1.3 percent in Seoul. City Developments Ltd., Singapore’s second-biggest real-estate company, led declines among the city’s property developers after the government imposed extra taxes on purchases of residential property.

“As the European meetings get closer investors have turned cautious,” said Masaru Hamasaki, who helps oversee the equivalent of $24 billion as chief strategist at Toyota Asset Management Co. in Tokyo. “There’s been a switch from a feeling that we were going to get some visibility on the situation to a cooler stance, where people are in a wait-and-see mood.”

The MSCI Asia Pacific Index slid 0.5 percent to 117.56 as of 8:28 p.m. in Tokyo. All but one of 10 industry groups on the measure dropped, with more than twice as many stocks falling as rising.

Japan’s Nikkei 225 Stock Average retreated 0.7 percent after machinery orders fell 6.9 percent in October from September, missing the median forecast of a 0.5 percent gain by 27 economists surveyed by Bloomberg News.

Australia’s S&P/ASX 200 index fell 0.3 percent as the nation’s employers cut 6,300 workers in November from the previous month, missing the 10,000 extra jobs forecast in a Bloomberg survey of 22 economists.

Interest Rates

New Zealand’s NZX 50 Index dropped 0.4 percent after the central bank left interest rates at a record low of 2.5 percent today and cut its economic growth predictions. South Korea’s Kospi Index declined 0.4 percent as the central bank refrained from raising borrowing costs for a sixth straight month amid a global slowdown. Hong Kong’s Hang Seng Index fell 0.7 percent, while Singapore’s Straits Times Index lost 2 percent.

The MSCI Asia Pacific Index declined 14 percent this year through yesterday, compared with a gain of 0.3 percent by the Standard & Poor’s 500 and a 12 percent slump by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.9 times estimated earnings on average, compared with 12.7 times for the S&P 500 and 10.6 times for the Stoxx 600.

Pressure Intensifies

LG Electronics fell 1.3 percent to 74,000 won in Seoul, while Hutchison Whampoa Ltd., an owner of ports in Germany, Italy and Spain, retreated 0.4 percent to HK$68 in Hong Kong.

Pressure on Europe’s leaders to halt the spread of the region’s debt crisis at a summit in Brussels this week intensified as the European Union had its AAA long-term rating put on “creditwatch negative” by S&P following a similar action on 15 euro-area governments.

German Chancellor Angela Merkel and French President Nicolas Sarkozy are expected to argue for rewriting European Union treaties to tighten control of national budgets at the meeting of euro zone leaders tonight and tomorrow.

“Investors can’t buy or sell until they see the results of the European meetings,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “Stocks have been rising on expectations the European Union and the European Central Bank may take some action, but now investors need to see whether the results meet or beat expectations.”

Tepco Action

Tokyo Electric Power, known as Tepco, dropped 11 percent to 244 yen after the Mainichi newspaper said the government’s Nuclear Damage Liability Facilitation Fund may buy preferred shares worth at least 1 trillion yen ($12.9 billion) from the utility by next summer, without saying where the information came from. Most of Tokyo Electric’s management will be replaced, the report said.

City Developments sank 8.3 percent to S$9.19 in Singapore, the second-biggest drop in the MSCI Asia Pacific Index after Tepco. CapitaLand Ltd., an operator in residential and commercial properties, dropped 7.3 percent to S$2.42. Keppel Land Ltd., the real-estate unit of Keppel Corp., retreated 8 percent to S$2.42.

Singapore developers declined after the government required foreigners and corporate entities to pay an additional 10 percent stamp duty when they buy homes in the city. Permanent residents purchasing a second home as well as citizens buying their third residential property also need to pay an additional tax of 3 percent, the government said in a statement yesterday.

--With assistance from Jonathan Burgos in Singapore and Toshiro Hasegawa in Tokyo. Editors: Nick Gentle, John McCluskey

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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European Stocks Drop as Italy Auctions Bonds; Software AG Falls

July 14, 2011, 12:34 PM EDT By Adam Haigh

July 14 (Bloomberg) -- European stocks fell for the fourth day in five after Italy auctioned bonds and Moody’s Investors Service said the American government may lose the Aaa credit rating it’s held since 1917.

Petrofac Ltd., the U.K.-based oilfield services and engineering provider, decreased 3.8 percent as Barclays Plc advised selling the shares. Software AG plunged 16 percent, its largest slide in more than two years, after posting a decline in sales. SAP AG, the world’s biggest business-software maker, lost 2.8 percent.

The Stoxx Europe 600 Index sank 0.8 percent to 267.68 at the 4:30 p.m. close in London. The gauge has fallen 2.2 percent this week amid concern that the sovereign-debt crisis in Europe will spread to the larger economies of Italy and Spain.

“Moody’s action overnight was a response to the small but rising risk of a short-lived default,” wrote Jim Reid, a global strategist at Deutsche Bank AG in London, in a report today. “Moody’s is now the rating agency putting most pressure on Congress to act.”

Moody’s put the U.S. on review for the first time since 1996 as talks to raise the country’s $14.3 trillion debt limit stalled, adding to concern that political gridlock will lead to default. Even a temporary default will probably have “large systemic effects” on the economy and Treasury finances by disrupting money funds, the repurchase-agreement market and foreign investors’ willingness to buy the government’s debt, according to JPMorgan Chase & Co.

Italy Bond Auction

Italy sold five-year bonds at the highest yield in three years. The Treasury priced 1.25 billion euros ($1.8 billion) of 2016 bonds today at an average yield of 4.93 percent, compared with a yield of 3.9 percent at a previous auction on June 14.

Prime Minister Silvio Berlusconi won a confidence vote in the Italian Senate on an austerity package aimed at balancing the budget in 2014, paving the way for the Chamber of Deputies to pass the plan tomorrow.

Greece’s credit rating was cut three levels to Fitch Ratings’ lowest grade for any country in the world as the company followed rivals and said that a default is a “real possibility.”

European stocks had increased yesterday as Federal Reserve Chairman Ben S. Bernanke said he’s prepared to provide more stimulus if needed and as China’s economic growth beat estimates. The Stoxx 600 has rallied 87 percent including dividend income since March 2009 as governments and central banks from Washington to London enacted emergency stimulus measures to revive the economy.

U.S. Earnings Season

European stocks recouped some losses after JPMorgan Chase & Co. posted second-quarter earnings that topped estimates.

Germany’s Landesbank Hessen-Thueringen snubbed the European Union’s bank stress tests, refusing to give the European Banking Authority permission to publish all of its data. The stress test results will be published tomorrow after the close of European equity markets.

National benchmark indexes declined in all 18 western European market today. The U.K. FTSE 100 Index slid 1 percent, Germany’s DAX Index declined 0.7 percent and France’s CAC 40 Index retreated 1.1 percent.

Petrofac dropped 3.8 percent to 1,445 pence after the company was downgraded to “underweight” from “equal weight” at Barclays.

SAP, Software AG

Software AG tumbled 16 percent to 35.19 euros for the biggest decline in the Stoxx 600 as Germany’s second-largest maker of business software reported second-quarter revenue that missed analysts’ estimates due to currency moves and its failure to sell licenses. Software AG also said that demand to implement products from SAP fell from the same period a year earlier. SAP slipped 2.8 percent to 40.86 euros.

Accor SA and Intercontinental Hotels Group Plc fell 2.2 percent to 29.64 euros and 3.2 percent to 1,241 pence, respectively, after rival Marriott forecast third-quarter earnings of 25 to 29 cents per share. That fell short of analysts’ estimates for earnings per share of 30 cents.

Daily Mail & General Trust Plc slumped 4.1 percent to 421.3 pence after saying that advertising sales declined 7 percent in the 13 weeks through July 3.

Mothercare Plc decreased 1.4 percent to 405 pence as first- quarter U.K. comparative sales declined 4.3 percent.

Storebrand ASA surged 5.5 percent to 46.48 kroner for the biggest gain on the Stoxx 600. Norway’s largest publicly traded insurer posted second-quarter profit today that beat analysts’ estimates.

--Additonal reporting by Conor Sullivan in London. Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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European Stocks Climb on Greek Aid Speculation; Alpha Bank Jumps

May 31, 2011, 7:16 AM EDT By Sarah Jones

May 31 (Bloomberg) -- European stocks climbed after the euro rallied to a three-week high as investors speculated that European officials will sanction additional financial assistance for Greece. U.S. futures and Asian shares advanced.

Alpha Bank SA and EFG Eurobank Ergasias SA led a rally in Greek banks, climbing more than 5 percent in Athens trading. Vestas Wind Systems A/S led alternative-energy stocks higher for a second day. Steelmakers also advanced after Voestalpine AG posted higher full-year profit.

The Stoxx Europe 600 Index rose 0.9 percent to 281.43 at 11:51 a.m. in London, paring this month’s loss to 0.9 percent. The gauge has fallen for four straight weeks amid speculation that Greece will restructure its debt. Since reaching this year’s high on Feb. 17, the Stoxx 600 has retreated 3.3 percent.

“We have gone through a period in which a lot more pessimism surrounding this topic has come into the market and we are seeing something of a rebound off the back of that,” said Valentijn Van Nieuwenhuijzen, head of strategy at ING Investment Management, in a Bloomberg Television interview. “The likelihood of an explosion of the Greek situation over the next couple of months seems to have come down.”

The euro rallied against the dollar after Luxembourg Prime Minister Jean-Claude Juncker said European leaders will decide on a new aid package for Greece by the end of next month, while also ruling out a “total restructuring” of the nation’s debt. Junker spoke yesterday in Paris.

Inspectors from the European Union, the International Monetary Fund and the European Central Bank plan to conclude their review of Greece’s progress in meeting the terms of last year’s 110 billion-euro ($158 billion) bailout in the coming days. The EU will then formulate its plan for additional aid.

German Demands

The Wall Street Journal said Germany may stop demanding that Greece reschedules its bonds so that the Mediterranean nation can get a new package of loans. The newspaper cited unidentified people.

European stocks were little changed yesterday in reduced trading after U.K. and U.S. markets were closed for public holidays. Futures on the Standard & Poor’s 500 Index expiring next month advanced 1 percent today, while the benchmark MSCI Asia Pacific Index climbed 1.4 percent.

A U.S. report today may show that home prices in the world’s largest economy slumped in March by the most in 16 months, according to economists. The Case-Shiller report is due at 9 a.m. New York time. Separate figures may show manufacturing slowed in May, while consumer confidence improved.

German Retail Sales

In Europe, German retail sales rose in April as unemployment fell below 3 million for the first time in almost 19 years. Separate figures from the European Union’s statistic office showed that inflation in the euro area slowed in May to 2.7 percent from 2.8 percent in April, giving the ECB room to keep borrowing costs on hold next month.

Alpha Bank, Greece’s third-biggest lender, rallied 5.8 percent to 3.08 euros in Athens, while Eurobank, the country’s second-largest bank, surged 8 percent to 3.10 euros. Both stocks tumbled more than 6 percent yesterday as the IMF reviewed Greece’s efforts toward meeting fiscal targets.

Standard Chartered Plc rose 1.8 percent to 1,634.5 pence after Nomura Holdings Inc. raised its recommendation for the U.K. bank that makes the majority of its profit in Asia to “buy” from “neutral,” saying the firm remains “well positioned’ for the long term.

Analysts also raised their price estimate for the shares to 1,800 pence from 1,770 pence. The revised projection is 12 percent higher than last week’s closing price.

Vestas, Solarworld, Q-Cells

Vestas rallied 5.5 percent to 159.30 kroner in Copenhagen, while Germany’s Solarworld AG advanced 2.5 percent to 9.86 euros and Q-Cells SE surged percent 7.8 percent to 2.07 euros.

Alternative energy stocks rallied for a second day after Germany yesterday set 2022 as the final date to close its nuclear reactors, making it the largest nation to abandon atomic power.

Voestalpine advanced 2.8 percent to 34.25 euros after Austria’s largest steelmaker said fiscal full-year profit rose almost five-fold to 512.7 million euros as the global economy improved.

‘‘Further positive economic development in the second half of calendar year 2011 can be expected,” the company said. “Against this backdrop a further significant improvement of Voestalpine results should be possible in 2011/12.”

Kloeckner & Co. SE, the German steel trader operating in 15 countries in Europe and North America, gained 1.2 percent to 20.34 euros and ArcelorMittal, the world’s largest steelmaker, rose 1.5 percent to 23.24 euros. Salzgitter AG, Germany’s second-biggest steelmaker, jumped 3.1 percent to 51.62 euros.

Barratt, Britvic

Barratt Developments Plc, the U.K.’s biggest homebuilder by volume, climbed 2.5 percent to 115.3 pence after the Centre for Economics & Business Research forecast that U.K. house prices will rise 16 percent over the next four years after slipping 1.4 percent in 2011. Taylor Wimpey Plc rose 1.2 percent to 36.8 pence.

Britvic Plc increased 1.4 percent to 439.1 pence after Deutsche Bank AG raised its share price estimate for the maker of Robinsons’ fruit drinks by 5.6 percent to 475 pence.

Wolseley Plc jumped 4.1 percent to 2,072 pence after the Sunday Times reported that the supplier of heating and plumbing products will sell three of its U.K. business for 300 million pounds ($495 million). The newspaper did not say where it got the information.

--With assistance from Linzie Janis in London. Editors: Will Hadfield, Andrew Rummer

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

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Most European Stocks Fall on Concern IMF May Withhold Greek Aid

May 26, 2011, 12:27 PM EDT By Giles Broom

May 26 (Bloomberg) -- Most European stocks retreated after the head of the group of euro-area finance ministers said the International Monetary Fund may not release its portion of an aid payment to Greece next month.

UniCredit SpA, Italy’s biggest bank, and Banco Espirito Santo SA, Portugal’s largest by market value, both lost more than 2 percent. Burberry Group Plc, the U.K.’s biggest luxury retailer, tumbled 4.6 percent. Man Group Plc jumped 2.5 percent after the world’s biggest publicly traded hedge fund manager said profit fell less than it had previously forecast and client assets increased.

The Stoxx 600 declined 0.1 percent to 277.14 at the 4:30 p.m. close in London as three stocks fell for every two that climbed. The gauge has risen 5.7 percent from this year’s low on March 16 as investors speculated that company profits and government stimulus measures will keep the economic recovery on track.

“Should Greece default, it is a problematic scenario for risky assets and for the financial system,” said Thomas Steinemann, chief strategist at Vontobel Holding AG in Zurich, whose team helps oversee about $80 billion. “It’s a story killer.”

National benchmark indexes dropped in 16 out of 18 West European countries today. The U.K.’s FTSE 100 Index climbed 0.2 percent and France’s CAC 40 Index lost 0.3 percent. Germany’s DAX Index slumped 0.8 percent. The Euro Stoxx 50 Index for companies in the euro area fell 0.5 percent to 2,797.

Juncker Speaks

European stocks consolidated their losses as Jean-Claude Juncker, who leads the euro area’s group of finance ministers, said that the IMF may withhold its 3.3 billion-euro ($4.7 billion) contribution to the 12 billion-euro payment that Greece had expected to receive next month.

“There are specific IMF rules and one of those rules says that IMF can only take action when the refinancing guarantee is given over 12 months,” Juncker said at a conference in Luxembourg. “I don’t think that the troika will come to the conclusion that this is given,” he said.

UniCredit retreated 2.9 percent to 1.52 euros. Espirito Santo declined 2.3 percent to 2.72 euros. The cost to insure Greek sovereign debt rose 7 basis points to 1,424, according to CMA prices for credit-default swaps. That signals a 69 percent chance of default within five years.

U.S. Economic Growth

The U.S. economy grew at a 1.8 percent annual rate in the first quarter, less than economists had forecast, reflecting a smaller gain in consumer spending than previously calculated.

The revised increase in gross domestic product was the same as the U.S. Commerce Department estimated last month and compared with a 3.1 percent gain in the prior quarter. The median projection of economists surveyed by Bloomberg News called for a 2.2 percent increase.

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota yesterday trimmed his forecast for U.S. economic growth and slightly raised his outlook for unemployment, while reiterating his call for higher interest rates this year.

Kocherlakota predicted unemployment of “close to 8.5 percent” at year’s end, in a speech in Rochester, Minnesota, an estimate contrasting with “between 8 percent and 8.5 percent” in a May 11 speech. He estimated that the economy will grow “around 3 percent,” compared with “between 3 percent and 3.5 percent.”

Burberry Shares Slip

Burberry sank 4.6 percent to 1,260 pence as the company said that its operating margin will probably fall in the first six months of the fiscal year. Burberry, which is best known for its plaid-lined trench coats, also reported that full-year adjusted pretax profit rose 39 percent to 298 million pounds ($487 million). That beat the 292.8 million-pound average estimate of six analysts surveyed by Bloomberg.

“The level of investment is expected to weigh on first- half margins,” Katherine Wynne and David Jeary, analysts at Investec Plc, wrote in a note to clients today. “After a strong run, the shares may pause for breath, but we remain buyers for the sustainable growth story.” Burberry has soared 13 percent this year, while the FTSE 100 Index has failed to advance more than 0.1 percent.

Vestas Wind Systems A/S, the largest wind-turbine manufacturer, slumped 5.8 percent to 145.60 kroner. Jim Chanos, the short seller known for predicting Enron Corp.’s collapse, said investors should bet against the stock. The company “will be under financial strain and best avoided,” Chanos said yesterday at the Ira Sohn Conference in New York after European markets had closed.

SIG, Man Group

SIG Plc sank 2.2 percent to 148.1 pence after BofA Merrill Lynch cut its rating on the shares to “underperform” from “neutral.”

Bayer AG fell 1.9 percent to 54.71 euros after UBS AG cut its recommendation on the maker of aspirins to “neutral” from “buy,” citing valuation and “less positively skewed” near- term catalysts for the company’s Xarelto blood-thinner.

Man Group jumped 2.5 percent to 245 pence after saying full-year pretax profit from continuing operations dropped to $324 million from $541 million a year earlier. That beat Man’s March forecast for pretax profit of $280 million. Funds under management totaled $71 billion, up from $69.1 billion at the end of March, Man said.

Nobel Biocare rallied 6.3 percent to 18.65 Swiss francs, its biggest jump in 18 months, after Morgan Stanley raised the stock to “overweight” from “underweight.” The brokerage predicted that dental implant sales will accelerate.

Weir, Hellenic Telecommunications

Weir Group Plc, the Glasgow-based engineering company, rallied 5.3 percent to 1,984 pence, its highest price since at least 1989.

“We still remain positive in respect of Weir’s outlook,” Andrew Douglas, an analyst at Royal Bank of Scotland Group Plc in London, wrote in a note to clients late yesterday. “The shale story has a long way to go, in our view, both in North America and on a global scale, and we expect Weir to be a strong beneficiary of this future growth.”

Hellenic Telecommunications Organization SA climbed 4.8 percent to 7 euros after website Euro2day reported that Greece’s government will sell a 10 percent stake in the company to Deutsche Telekom AG within the next few days. Euro2day didn’t say how it got the information.

Elan Corp. gained 2.1 percent to 6.31 euros, its highest price since February 2009. The Irish drugmaker will probably do another licensing deal in the next six months, Chief Executive Officer Kelly Martin said after the close of trading yesterday.

Antofagasta Plc, the copper producer controlled by Chile’s Luksic family, advanced 3.5 percent to 1,258 pence after saying first-quarter profit rose 30 percent as output grew and prices climbed to a record.

--With assistance from Alexis Xydias in London. Editors: Will Hadfield, Mark Gilbert

To contact the reporter on this story: Giles Broom in Zurich at gbroom@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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U.S. Stocks Retreat for a Fourth Week on European Debt Concern

May 28, 2011, 12:23 AM EDT By Nikolaj Gammeltoft

May 28 (Bloomberg) -- U.S. stocks fell a fourth straight week, the longest slump in 15 months, as concern Europe’s debt crisis is worsening overshadowed rallies by commodity producers and a Group of Eight forecast for faster economic growth.

The S&P 500 pared its loss yesterday, gaining 0.4 percent, after G-8 leaders said a strengthening economy will help nations cut debt. Utilities, health-care stocks and household-products makers fell the most among 10 industries in the index, losing 1 percent or more, as investors sold stocks least-dependent on economic growth. Fuel and metal producers gained the most, adding 2 percent. Luxury retailer Tiffany & Co. surged 10 percent after raising its profit forecast.

The S&P 500 fell 0.2 percent to 1,331.10 this week. It dropped throughout May after reaching an almost three-year high on April 29. The Dow Jones Industrial Average lost 70.46 points, or 0.6 percent, to 12,441.58 this week.

“The market is seesawing back and forth, trying to assess these spectacular risks which live on the front page of the news and weigh them against strong corporate profitability,” said Stephen Wood, the New York-based chief market strategist for Russell Investments, which manages about $161 billion.

The S&P 500 has retreated 2.4 percent this month, fueled by concern Greece is struggling to avoid default and weaker-than- forecast economic data, including a decline in U.S. housing starts. Before this week, the advance since the S&P 500’s 2011 low on March 16 was led by health-care stocks, followed by consumer companies that sell necessities, telephone networks and utilities, as investors sought havens. The trend reversed this week as commodity producers surged.

Debt Crisis

Stocks decreased on May 23, giving the S&P 500 its biggest drop in two months, amid concern that the economic rebound is slowing and Europe’s debt crisis is worsening. The Federal Reserve Bank of Chicago’s gauge of economic activity unexpectedly dropped below zero in April, meaning the national economy is experiencing below-trend growth.

In Europe, Spanish Prime Minister Jose Luis Rodriguez Zapatero’s Socialist party suffered its worst defeat in more than 30 years in local elections amid a backlash over austerity measures. Italy’s credit-rating outlook was revised to negative from stable by S&P on May 20. Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said the International Monetary Fund may not release its portion of a 12 billion-euro ($17.2 billion) aid payment to Greece next month.

Utilities in the S&P 500 declined 1.7 percent, the most among 10 industries. PG&E Corp., a power company based in San Francisco, dropped 3.8 percent to $43.10. Integrys Energy Group Inc. slumped 3.2 percent to $51.97.

Medco, Hormel

Health-care shares in the S&P 500 slumped 1.2 percent, led by Medco Health Solutions Inc.’s 8.8 percent retreat to $58.66. CVS Caremark Corp. won a $3 billion contract to provide pharmacy benefits to federal employees, winning the deal away from Medco. Medtronic Inc. fell 4.5 percent to $40.31.

The so-called consumer staples group in the S&P 500 lost 1 percent. Hormel Foods Corp., which makes cold cuts and packaged foods, fell 3.5 percent to $29.03. Safeway Inc., a grocer, declined 2.7 percent to $24.52.

S&P 500 gains were led by raw-material and energy stocks, which advanced more than 2 percent. AK Steel Holding Corp. rallied 8.2 percent to $15.29. Freeport-McMoRan Copper & Gold Inc. increased 6.9 percent to $51.73. Exxon Mobil Corp. climbed 1.3 percent to $82.63.

Government Contracts

Computer Sciences Corp. sank 10 percent to $40.04. The provider of technology services to companies and U.S. government agencies gave a fiscal full-year forecast that missed analysts’ estimates. The company has been hurt by delays in federal contract decisions and is working to revise its contract with the U.K. government’s National Health Service.

American International Group Inc. sank 6.2 percent to $28.88. The Treasury sold 200 million shares at $29 each, compared with the most-recent closing price of $29.46. The government, which retains a majority stake, must sell shares at an average of about $28.73 to recover a $47.5 billion investment.

LinkedIn Corp. declined 5.1 percent to $88.32. The first major U.S. social-media company to go public more than doubled following its initial public offering last week, prompting investors such as Gamco Investors Inc.’s Lawrence Haverty to say the stock is overvalued.

The S&P 500 rose yesterday, finishing a three-day rally, after consumer sentiment increased to a three-month high in May and the Group of Eight leaders said that a strengthening global economy will pave the way to cuts in the debt built up during the recession that followed the 2008 financial crisis.

Europe vowed to fight its fiscal woes with “determination,” while President Barack Obama promised a “clear and credible” U.S. deficit-reduction strategy.

Tiffany rallied to its highest level since its May 1987 IPO, gaining 10 percent to $76.50 for the second-biggest increase in the S&P 500. The world’s second-largest luxury jewelry retailer raised its annual forecast as sales surged globally and recovered in earthquake-hit Japan.

--Editors: Nick Baker, Chris Nagi

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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European Stocks Advance; Intesa Sanpaolo Leads Rally in Banks

May 25, 2011, 12:39 PM EDT By Julie Cruz

May 25 (Bloomberg) -- European stocks climbed the most in two weeks as concern eased that the region’s debt crisis will spread after Jean-Claude Juncker said an assessment on new measures for Greece may come as soon as next week.

Banks had the best performance among 19 industry groups in the Stoxx Europe 600 Index, with Intesa Sanpaolo SpA rising 5.1 percent. EON AG and RWE AG, Germany’s biggest utilities, advanced after the Financial Times Deutschland reported the government may scrap a tax on nuclear reactors. Cable & Wireless Communications Plc plunged 12 percent after saying it’s cautious on the outlook for its Caribbean operations.

The Stoxx 600 gained 0.7 percent to 277.37 at the 4:30 p.m. close in London, reversing earlier declines of as much as 0.6 percent. The gauge has risen 5.8 percent from this year’s low on March 16 amid optimism company profits and government stimulus measures will keep the economic recovery on track.

“Greece is still a concern but Juncker saying that by mid- next week a decision will have been made regarding how Greece will be helped is supporting the market,” said Markus Huber, head of German sales trading at ETX Capital in London. “What the market needs is to hear what actions will be taken by the ECB and the IMF in order to avoid a default by Greece. The earlier this happens the less likely will be a contagion to other countries.”

Greek Assistance

Juncker, who heads the group of euro-area finance ministers, said he is strongly against a full restructuring of Greece’s debt. Euro-region countries may take further steps to help Greece with its debt crisis if the country meets all requests by the 17-member currency zone, he told reporters in The Hague. A final assessment on new measures for Greece may come as early as next week, he said.

A report today showed U.S. orders for durable goods fell more than forecast in April, reflecting lower demand for aircraft and disruptions in supplies of auto parts stemming from the earthquake in Japan. Bookings for goods meant to last at least three years fell 3.6 percent, the most since October, after a 4.4 percent jump in March, Commerce Department data showed. Economists projected a 2.5 percent drop in April, according to the median forecast in a Bloomberg News survey.

National benchmark indexes advanced in 15 of the 18 western European markets today. Germany’s DAX and France’s CAC 40 rose 0.3 percent. The U.K.’s FTSE 100 gained 0.2 percent.

Banks Advance

European banking shares rose 2.1 percent as a group, led by gains in Italian lenders. Intesa Sanpaolo jumped 5.1 percent to 1.76 euros and Banca Popolare di Milano Scrl surged 3.9 percent to 1.94 euros. UniCredit SpA, Italy’s biggest bank, rose 2.7 percent to 1.57 euros.

Italian banks are well positioned to pass European Union’s stress tests, Prometeia said. The country’s lenders hold portfolios that are less risky than their counterparts in France and Germany, the research group said at a presentation in Milan.

Commerzbank AG, Germany’s second-largest bank, rallied 6.1 percent to 3.21 euros, the biggest increase in a year. All 13 German lenders examined in the second round of EU stress tests are likely to pass after boosting and converting capital and shifting risky assets into bad banks, three people familiar with the process said.

EON, RWE

EON and RWE gained 2.3 percent to 20.12 euros and 1.9 percent to 41.49 euros, respectively. German reactor operators could reach an informal deal with the government in which the tax is dropped in exchange for the utilities accepting shorter running times for nuclear plants and not pursuing legal challenges to atomic energy policy, the FTD reported, citing unidentified people close to the government and ruling coalition.

Cable & Wireless Communications plunged 12 percent to 42.41 pence, the lowest since July 2006. The U.K. telecommunications company said “we are cautious on the economic and financial outlook for the Caribbean.”

Hexagon AB, the world’s biggest maker of measuring instruments, sank 4 percent to 154.60 kronor, the biggest retreat in six months, as Chairman Melker Schorling and Chief Executive Officer Ola Rollen sold 11.7 million shares.

Vallourec SA, a French producer of steel pipes, slid 1.6 percent to 83.60 euros as Societe Generale SA downgraded the shares to “hold” from “buy.”

--Editor: Andrew Rummer

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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European Stocks Rise; BHP Billiton Gains as Commodities Rebound

May 24, 2011, 10:40 AM EDT By Adria Cimino

May 24 (Bloomberg) -- European stocks advanced, with the benchmark Stoxx Europe 600 Index rebounding from a one-month low, as commodities rallied and a report showed that U.S. new- home sales increased more than forecast last month.

BHP Billiton Ltd., the world’s biggest mining company, and Rio Tinto Group, the third largest, both gained at least 2.5 percent as metal prices rose. Travis Perkins Plc climbed 4 percent after Jefferies Group Inc. recommended buying the company’s shares.

The Stoxx 600 rose 0.5 percent to 276.27 at 3:16 p.m. in London. The index fell last week after Greek 10-year bond yields climbed to a record and Fitch Ratings cut Greece’s credit rating to B+, four notches below investment grade. The Stoxx 600 yesterday erased its gains for the year after Spain’s ruling Socialist Party suffered its worst election defeat in 30 years and Standard & Poor’s said it may downgrade Italy’s debt.

“Even if economic growth isn’t as strong, in the long term commodity stocks always tend to go higher,” said Jacques Porta, a Paris-based fund manager at Ofi Patrimoine, who helps oversee about $425 million in stocks. “I’m overweight on them. Everyone is. It’s a story of supply and demand. Emerging markets are big consumers of commodities.”

German business confidence remained unexpectedly unchanged in May as booming exports and rising company spending boosted economic growth. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, held at 114.2, the same as in April. Economists had forecast a decline to 113.7, the median of 24 predictions in a Bloomberg News survey showed.

U.S. Home Sales

In the U.S., a Commerce Department report showed that purchases of new houses rose in April to the most so far this year. Sales climbed 7.3 percent to a 323,000 annual pace last month. The median estimate in a Bloomberg News survey of economists called for sales at a 300,000 annual rate, unchanged from the prior month. Housing prices rose from a year earlier.

National benchmark indexes gained in 16 of the 18 western European markets. France’s CAC 40 Index climbed 0.5 percent. Germany’s DAX Index and the U.K.’s FTSE 100 Index increased 0.9 percent.

Of the 312 Stoxx 600 companies that have reported earnings since April 11, 58 percent have beaten analysts’ estimates, according to data compiled by Bloomberg.

BHP, Rio, Xstrata

BHP Billiton climbed 2.5 percent to 2,361 pence as copper, lead, zinc and aluminum advanced in London. Rio Tinto increased 2.7 percent to 4,142.5 pence and Xstrata Plc rose 2.8 percent to 1,395 pence. A gauge of basic-resource shares was the best performing of the 19 industry groups in the Stoxx 600. Commodities rebounded from the biggest drop in almost two weeks after Goldman Sachs Group Inc. said it’s turning “more bullish” on raw materials.

Anglo American Plc increased 2.4 percent to 2,897.5 pence. Kazakhmys Plc, a Kazakh copper miner listed in London, gained 3.1 percent to 1,244 pence. Antofagasta Plc, the copper producer controlled by Chile’s Luksic family, jumped 4.1 percent to 1,207 pence.

Travis Perkins jumped 4 percent to 1,041 pence. The shares were initiated with a “buy” rating at Jefferies, which said the stock has 30 percent upside potential.

Arkema SA surged 3.5 percent to 74.31 euros. The stock was raised to “overweight” from “neutral” at HSBC, which said its valuation is the cheapest among European chemical companies.

Mitie, Gas Natural

Mitie Group Plc rallied 5.1 percent to 231.6 pence, its second day of gains, after the company yesterday reported results that showed “an encouraging pick-up in organic growth,” according to a report from UBS AG analyst Alex Hugh, who raised his price estimate on the shares 7.7 percent to 280 pence each. Royal Bank of Scotland Group analyst Kean Marden wrote in a report today that the company’s organic sales growth guidance may be “conservative.”

Gas Natural SDG SA added 1.7 percent to 13.14 euros. The company plans to increase its capital and give Algeria’s national oil company Sonatrach a 10 percent stake as part of a compensation deal, Cinco Dias reported, citing unidentified people close to the matter.

Gas Natural will make an additional payment in cash, settling the remaining money it owes Sonatrach in future price accords for gas supplies, the newspaper said. The Spanish company said it has yet to reach an agreement with Sonatrach.

Greek Privatizations

Greek stocks advanced after the government announced a stepped-up plan to sell holdings in companies including Hellenic Telecommunications Organization SA.

Hellenic Telecom soared 4.2 percent to 6.76 euros. Hellenic Postbank SA surged 5.7 percent to 2.97 euros after the government said it may sell all its 34 percent stake in the lender this year.

Marks & Spencer Group Plc declined 2.4 percent to 387.5 pence. The U.K.’s largest clothing retailer said the outlook for the economy remains challenging as consumers continue to experience a squeeze on their disposable incomes. The company reported fiscal full-year underlying pretax profit of 714.3 million pounds ($1.2 billion). That beat the average analyst estimate of 711 million pounds.

Renewable Energy Corp. slumped 14 percent to 13.13 kroner, its largest drop since February 2010, after the company forecast that it will make a smaller second-quarter operating profit than it did in the first quarter. Renewable Energy also said it will cut its output of wafers, cells and modules in response to current market conditions.

--Editor: Will Hadfield

To contact the reporter on this story: {Adria Cimino} in Paris at acimino1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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European Stocks Sink as Debt Concern Deepens; Ryanair Slumps

May 23, 2011, 12:12 PM EDT By Sarah Jones

May 23 (Bloomberg) -- European stocks dropped to a one- month low after Spain’s ruling party suffered its worst election defeat in 30 years and Standard & Poor’s warned it may downgrade Italy’s debt.

Banco Santander SA, Spain’s largest bank, and Italy’s Intesa Sanpaolo SpA led a selloff in financial shares, both falling more than 1.5 percent. Commerzbank AG plunged 5.3 percent after the German lender announced a 5.3 billion-euro ($7.4 billion) share sale. Airlines tumbled after Ryanair Holdings Plc reported earnings and a volcanic eruption in Iceland threatened to disrupt trans-Atlantic flights.

The benchmark Stoxx Europe 600 Index dropped 1.6 percent to 275.08 at the 4:30 p.m. close in London, erasing its gain for the year. The gauge fell last week after Greek 10-year bond yields climbed to a record and Fitch Ratings cut Greece’s credit rating to B+, four notches below investment grade.

“Whilst the euro-area outlook deteriorates, the general buoyancy of financial markets has also disappeared in the last few days,” said Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank Plc in London. “It seems this week will be pivotal to the immediate future of the structure of euro-zone debt, with announcements and further downgrades possible through the week.”

The Euro Stoxx 50 Index of shares in the euro zone retreated 1.9 percent to 2,799.38, for its biggest two-day drop since March.

Euro Declines

The euro touched a record low against the Swiss franc and reached its lowest in a week against the dollar after Spain’s Socialist Party suffered a defeat in local elections as voters punished Prime Minister Jose Luis Rodriguez Zapatero’s party for soaring unemployment and spending cuts.

The 17-nation currency also fell after S&P on May 20 cut Italy’s credit-rating outlook to negative from stable, citing slowing economic growth and “diminished” prospects for a reduction of government debt. Italy’s Treasury said in a statement from Rome that it will “intensify” structural changes in the economy and push ahead with measures to balance the budget by 2014.

Italy’s FTSE MIB Index tumbled 3.3 percent, the largest drop of the 18 western European benchmarks, as 27 companies including Eni SpA and Intesa Sanpaolo traded without the right to their latest dividend. Spain’s benchmark IBEX Index retreated 1.4 percent, while Ireland’s ISEQ Index lost 1.7 percent.

European Markets

National benchmark indexes retreated in all 18 western European markets. The U.K.’s FTSE 100 Index lost 1.9 percent and France’s CAC 40 Index dropped 2.1 percent, dragged lower by Total SA as the oil company traded without the right to its latest dividend. Germany’s DAX Index retreated 2 percent.

European services and manufacturing growth slowed more in May than economists had forecast, a report from London-based Markit Economic showed today, suggesting that the region’s economy is struggling to maintain momentum amid surging energy costs and tougher government austerity measures.

Santander declined 1.7 percent to 7.77 euros in Madrid. Intesa, Italy’s second-biggest bank, dropped 2.8 percent to 1.69 euros. Bank of Ireland Plc retreated 5.4 percent to 20.3 euro cents in Dublin.

Credit Agricole SA sank 3 percent to 10.53 euros after S&P downgraded the counterparty credit rating for France’s third- largest lender to A+/A-1 from AA-/A-1+, saying the bank has a “significant sensitivity” to Greece’s creditworthiness and economic prospects.

Commerzbank lost 5.3 percent to 3.74 euros in Frankfurt after announcing plans to raise capital by selling new shares to help repay state aid. Germany’s second-biggest bank will sell 2.44 billion new shares at 2.18 euros apiece. Shareholders will be allowed to subscribe to 10 new shares for every 11 already held from May 24 to June 6, the company said.

Icelandic Volcano

Ryanair retreated 5.3 percent to 3.36 euros as Europe’s biggest discount airline said it will cut capacity for the first time in its history next winter as higher fuel costs threaten to render swathes of the network unprofitable.

The airline said annual profit will be “similar” to last year’s amid slower growth in demand. The airline still reported a 26 percent jump in full-year adjusted profit after taxes to 401 million euros.

Airlines also retreated as Britain’s weather agency said that ash from the volcanic eruption that began on May 21 under Europe’s largest glacier, Vatnajokull, may reach the U.K. as early as tonight, threatening trans-Atlantic air traffic.

Predictive charts on the U.K. Met Office website show ash from the Grimsvotn volcano stretching south from Iceland as far as the western isles of Scotland by midnight tonight, mainly at lower altitudes.

Air France, EasyJet

Air France-KLM Group slumped 4.5 percent to 11.46 euros in Paris trading, while EasyJet Plc lost 4.9 percent to 345.1 pence. Lufthansa, Europe’s biggest airline by sales, sank 3.5 percent to 15.03 euros.

Anglo American Plc and Royal Dutch Shell Plc led a selloff in commodity producers as base metals fell in London and crude oil tumbled in New York. Anglo American declined 4.1 percent to 2,830.5 pence, Antofagasta Plc lost 3.9 percent to 1,160 pence and Shell dropped 2.3 percent to 2,095 pence.

Copper, Metals Slide

Copper dropped the most in two weeks on the London Metal Exchange as figures showed weaker manufacturing growth in China, the world’s biggest consumer of the metal. Crude oil fell after the dollar rose to a nine-week high against the euro.

British Land Co. declined 2.8 percent to 576 pence. The U.K.’s second-largest real-estate investment trust posted a 26 percent drop in full-year profit to 840 million pounds ($1.4 billion) after the company’s shopping centers and office buildings appreciated at a slower rate.

Ericsson AB lost 3 percent to 91.95 kronor after BofA Merrill Lynch Global Research lowered its recommendation to “underperform” from “neutral,” which said expectations for earnings in coming quarters may be too high.

Pandora A/S, the Danish maker of charm bracelets, extended last week’s drop, sinking 11 percent to 178 kroner. The stock fell 22 percent on May 19 after first-quarter sales missed most estimates, hurt by weakness in Australia and Germany.

--With assistance from Alexis Xydias in London. Editors: Will Hadfield, Andrew Rummer

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

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European Stocks Are Little Changed; M&B Slides, BP Shares Rally

May 20, 2011, 10:33 AM EDT By Giles Broom

May 20 (Bloomberg) -- European stocks were little changed as Greek 10-year bond yields rose to a record high, offsetting speculation that the Federal Reserve will maintain its stimulus.

BP Plc advanced after the oil company reached a settlement with a unit of Mitsui & Co., one of its partners on the Macondo well. Micro Focus International Plc rallied 6.8 percent after saying that Advent International Corp. has made an approach for the U.K. software producer. Mitchells & Butlers Plc, the owner of Harvester and Toby Carvery pubs and restaurants, sank 5 percent after posting reduced fiscal first-half profit.

The Stoxx 600 increased less than 0.1 percent to 280.05 at 3:07 p.m. in London, heading for a weekly decline of 0.2 percent. The gauge advanced 0.7 percent yesterday as companies from Glencore International Plc to LinkedIn Corp. held initial public offerings. Even so, the measure has fallen 3.8 percent since this year’s high on Feb. 17.

“Valuations are cheap and extremely attractive compared with government or corporate bonds,” said Ian Richards, an equity strategist at Royal Bank of Scotland Plc in London. “The economic growth outlook is still okay and the U.S. and European countries are progressively addressing the structural debt problems.”

Federal Reserve Stimulus

Fed Bank of Chicago President Charles Evans said improvements in the economy, labor market and the outlook for inflation aren’t sufficient for the Fed to begin withdrawing its record monetary stimulus.

“Slow progress in closing resource gaps and a medium-term outlook for inflation that is too low lead me to conclude that substantial policy accommodation continues to be appropriate,” Evans said yesterday.

Fed Bank of New York President William C. Dudley said it’s important for the central bank not to “overreact” to the recent pickup in inflation by tightening monetary policy.

The Bank of Japan kept its benchmark interest rate unchanged near zero and refrained from increasing its credit programs at the end of a two-day meeting today, as predicted by all 14 economists surveyed by Bloomberg News.

European shares pared their earlier advance as Germany’s Bundesbank said that the continent’s largest economy will probably lose some momentum. The economy’s 1.5 percent growth rate in the first quarter from the previous three months “considerably overstates the underlying economic momentum. Output growth was clearly lifted during the reporting period by backloading and catching-up effects,” the Frankfurt-based bank said in its monthly bulletin published today.

Greek Debt

Greek bonds slid on speculation that the Mediterranean nation will have to reorganize its debt obligations as it struggles to reduce its fiscal deficit this year.

National benchmark indexes retreated in 14 of the 18 western European markets. The U.K.’s FTSE 100 Index lost 0.1 percent and France’s CAC 40 Index dropped 0.4 percent. Germany’s DAX Index retreated 1.1 percent. Copenhagen’s stock market was closed for a public holiday.

BP surged 2.2 percent to 457.7 pence after saying a unit of Mitsui will pay Europe’s second-largest oil company by sales $1.1 billion after reaching a settlement over last year’s Gulf of Mexico spill. The stock has fallen 30 percent since the Deepwater Horizon oil rig exploded last year, while the MSCI World/Energy Index has risen 13 percent.

Separately, Investec Plc upgraded the shares to “buy” from “hold” today. “We believe CEO Bob Dudley can regain BP’s once fundamentally unique reputation as the industry ‘thought leader,’” Stuart Joyner, an analyst at Investec in London, wrote in a note to clients today.

CGGVeritas, the world’s largest seismic surveyor of oilfields, climbed 3.4 percent to 25.02 euros after announcing it will create a marine joint venture with Elnusa Tbk PT.

Micro Focus Advances

Micro Focus soared 6.8 percent to 395 pence for the largest gain in the Stoxx 600. Advent International has approached the company about a potential takeover, Micro Focus said in a statement.

“At this stage, there can be no certainty that any offer for the company will be forthcoming nor as to the price at which any offer might be made,” the statement said.

Prudential Plc advanced 1 percent to 747 pence after UBS AG said that the “underperformance” by the U.K.’s largest insurer by market value produced “an attractive buying opportunity” in a note to clients today.

Credit Suisse Rises

Credit Suisse Group AG climbed 1 percent to 36.75 Swiss francs after Deutsche Bank AG upgraded the shares to “buy” from “hold.” Switzerland’s second-biggest bank is “not exposed to peripheral Europe” and “is strengthening its capital base,” Matt Spink and Alexander Hendricks, both research analysts at Deutsche Bank, wrote in a note to clients today.

Scottish & Southern Energy Plc rose 1.9 percent to 1,352 pence, bringing the stock’s gain this year to 10 percent. The U.K. power producer posted full-year adjusted profit after taxes that increased 2.5 percent to 1.04 billion pounds ($1.7 billion).

BioMerieux, the maker of HIV and hepatitis tests, soared 3.9 percent to 78.57 euros after agreeing to buy AES Laboratoire Groupe for 183 million euros ($259 million).

Rhoen-Klinikum AG, the German operator of medical clinics, increased 4 percent to 17.29 euros.

“Privatization activity is picking up and Rhoen has enough firepower to participate successfully,” Holger Blum and Gunnar Romer, analysts at Deutsche Bank, wrote in a note to clients today. The bank upgraded the company to “buy” from “hold.”

Mitchells & Butlers Slips

Mitchells & Butlers slumped 5 percent to 319.7 pence, its biggest drop in almost six months. The company reported that net income fell 29 percent in the 28 weeks ended April 9 as revenue declined and the company incurred one-off costs. Profit dropped to 37 million pounds from 52 million pounds a year earlier, the Birmingham, England-based company said today.

Shares in Inditex, the world’s largest clothing retailer, slid 2.2 percent to 61.24 euros. Gap Inc., the largest U.S. apparel chain, yesterday cut its profit forecast 22 percent as the cost of making clothes rose more than it had predicted.

--Editor: Will Hadfield

To contact the reporter on this story: Giles Broom in Zurich at gbroom@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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European Stocks Advance as Real Estate, Mining Companies Rally

May 18, 2011, 12:39 PM EDT By Sarah Jones

May 18 (Bloomberg) -- European stocks climbed, snapping the longest losing streak in two months, as Land Securities Group Plc led gains in property companies and basic-resource producers rallied with commodities.

Land Securities surged the most in almost two years after the U.K.’s largest real-estate investment trust reported earnings that topped estimates. Antofagasta Plc climbed as copper jumped the most in two months in London. Ageas led declining shares as benchmark gauges in the euro region’s peripheral countries fell.

The Stoxx Europe 600 Index rose 0.3 percent to 278.17 at the 4:30 p.m. close in London. The measure, which fell for the previous four days, is still down 4.5 percent from this year’s high on Feb. 17 as a selloff in commodities and concern the debt crisis will derail the economic recovery overshadowed company profits and government stimulus measures.

“Equities will continue to grind higher, but there will be pockets of volatility with geopolitical news flow,” said Kevin Lilley, a London-based fund manager who helps oversee about $2 billion at Royal London Asset Management. “Companies have got strong balance sheets and policy stimulus will only get removed when it’s clear that there is sufficient growth.”

National benchmark indexes gained in 12 of the 18 western European markets today. The U.K.’s FTSE 100 rallied 1.1 percent and Germany’s DAX advanced 0.7 percent. Portugal’s PSI-20 fell 0.4 percent and Greece’s ASE dropped 1.4 percent as Alpha Bank SA slid 3.6 percent to 3.52 euros.

Greek Debt

European Central Bank officials today ruled out a Greek debt restructuring, clashing with political leaders over a solution to the sovereign financial crisis. Ministers earlier in the week floated the idea of extending Greece’s debt-repayment schedule as it struggles to meet the terms of its 110 billion- euro ($156 billion) bailout.

Bank of England policy makers voted 6-3 to keep interest rates on hold this month as the majority warned that tightening policy now could damp consumer spending and harm the recovery. The U.S. Federal Reserve was due to release minutes from last month’s policy meeting after the close of European trading.

Fed Bank of St. Louis President James Bullard said in a Bloomberg Television interview that the central bank is in a “fairly good position” to pause in its stimulus and that “it is reasonable” to expect policy tightening by the end of 2011.

Land Securities Soars

Land Securities surged 6.4 percent to 795.5 pence, its biggest gain since August 2009, after reporting a 14 percent increase in annual net income to 1.24 billion pounds ($2 billion) as the value of its properties increased. That beat analysts’ projected profit of about 979 million pounds, according to a Bloomberg survey.

British Land Co., the U.K.’s second-biggest REIT, advanced 4.6 percent to 604.5 pence and Hammerson Plc, the third-largest, rallied 3.2 percent to 479.2 pence. A gauge of real-estate companies in the Stoxx 600 had the biggest gain in two months.

Antofagasta, the copper producer controlled by Chile’s Luksic family, rose 2.9 percent to 1,208 pence as base metals advanced on the London Metal Exchange. Copper had the biggest increase since March 17.

Kazakhmys, Kazakhstan’s biggest copper company, gained 3.2 percent to 1,256 pence and Vedanta Resources Plc increased 1.8 percent to 2,135 pence.

Eurasian Natural Resources Corp. rallied 4.3 percent to 841 pence after Citigroup Inc. upgraded the producer of metals in Kazakhstan to “buy” from “hold.”

Yara, SGL

Yara International ASA rose 2 percent to 305.4 kroner after the price of corn rose for a fifth day in Chicago, the longest winning streak since December. The world’s biggest publicly traded nitrogen-fertilizer maker also announced new season nitrate prices in Europe.

SGL Carbon SE jumped 6 percent to 35.77 euros after the company’s biggest shareholder, Susanne Klatten, increased her voting rights in the world’s biggest maker of carbon and graphite products to 26.98 percent last week. The German billionaire is the owner of investment company Skion GmBH.

Ageas dropped 3.6 percent to 1.95 euros after the majority owner of Belgium’s biggest life insurer said rising bond yields depleted the value of the cushion available to absorb losses in its insurance business. The market value of government and corporate bonds held by Ageas subsidiaries fell about 1.2 billion euros in the quarter, reducing shareholders’ equity by 0.7 percent.

Storebrand ASA, Norway’s largest publicly traded insurer, lost 2.8 percent to 49.42 kroner.

--Editors: Andrew Rummer, Will Hadfield

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

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European Stocks Drop as Commodities Extend Rout; BHP, Rio Slide

May 12, 2011, 7:35 AM EDT By Sarah Jones

May 12 (Bloomberg) -- European stocks dropped for the first time in three days, as commodities extended yesterday’s rout and insurance companies fell. U.S. index futures and Asian shares also retreated.

BHP Billiton Ltd. and Rio Tinto Group lost more than 3 percent after copper slumped to a five-month low and crude fell below $98 a barrel. Insurers declined as companies from Allianz SE to Aegon NA reported earnings. Thales SA dropped 4.1 percent on a report that the company may make a cash contribution as part of an asset swap with Safran SA.

The benchmark Stoxx Europe 600 Index retreated 1.1 percent to 280.6 at 12:08 p.m. in London for the biggest drop in a week. The gauge yesterday increased for a second day as companies from A.P. Moeller-Maersk A/S to Hermes International SCA posted results that topped estimates. Standard & Poor’s 500 Index futures lost 0.5 percent today.

“It’s a pretty tense trading session today with European markets under pressure after a weak Asian market and early forced selling in commodities,” said Lex van Dam, a London- based fund manager at Hampstead Capital LLP, which oversees $500 million. “Asian markets have been trading badly for the last six months and it feels that this might be spreading to Europe.”

The MSCI Asia Pacific Index extended yesterday’s selloff in the U.S., slipping 1.6 percent today. The benchmark gauge has climbed 3.1 percent over the last six months, while the Stoxx 600 has risen 7.6 in dollar terms.

U.S. stocks dropped the most since March 16 yesterday after commodities tumbled amid a strengthening dollar and concern that accelerating global inflation may curb economic growth. China today raised bank’s reserve requirements by 0.5 percentage points with effect from May 18.

Earnings Season

Thirty-two companies on the Stoxx 600 are scheduled to report results today. Of the 272 companies in the gauge that have reported earnings since April 11, 59 percent have beaten analyst forecasts for per-share profit, according to data compiled by Bloomberg. That compares with 72 percent of U.S. companies in the same period.

A U.S. Commerce Department report today may show that retail sales climbed in April as employment accelerated. Figures from the nation’s Labor Department may show fewer workers filed claims for jobless benefits last week, while wholesale costs rose. All three reports are scheduled for release at 8:30 a.m. in Washington.

BHP, the world’s largest mining company by market value, and Rio Tinto, the third-biggest, led commodity shares lower. BHP dropped 3.1 percent to 2,331 pence and Rio slid 3.3 percent to 4,047 pence. Anglo American Plc lost 3.4 percent to 2,889 pence.

Copper, Oil Slide

Copper tumbled to a five-month low as speculation mounted that China may continue monetary tightening after inflation spread beyond food, damping the demand outlook in the world’s largest consumer of the metal. Aluminum and zinc also retreated.

Crude oil extended yesterday’s 5.5 percent selloff, falling 2.3 percent to $95.96 a barrel in New York today. The contract dropped yesterday after the U.S. Energy Department reported a surge in stockpiles last week.

Allianz slid 2.5 percent to 99.11 euros after Europe’s biggest insurer posted a 45 percent drop in first-quarter net income to 857 million euros ($1.2 billion) on natural-disaster claims and lower investment gains.

Operating profit at the property and casualty unit, Allianz’s most important in terms of earnings, dropped 6.9 percent to 663 million euros. The company on May 4 predicted that it will face claims of about 320 million euros from the earthquake and subsequent tsunami in Japan.

Aegon, RSA Insurance

Aegon sank 5.6 percent to 5.07 euros after the Dutch insurer reported a 12 percent drop in first-quarter profit to 327 million euros as it posted lower investment gains. Earnings missed the 337 million-euro average estimate of 11 analysts surveyed by Bloomberg.

RSA Insurance Group Plc slid 1 percent to 138.4 pence. The U.K.’s biggest non-life insurer by market value said first- quarter sales rose 8 percent on growth in emerging markets. RSA posted net written premiums of 2.1 billion pounds ($3.4 billion) in the three months to March 31.

Thales sank 4.1 percent to 28.98 euros after Les Echos reported that the company may make a cash contribution of as much as 500 million euros as part of a possible asset swap with Safran. The newspaper cited an unidentified person familiar with the talks.

Thales, Europe’s largest defense-electronics producer, posted first-quarter revenue of 2.52 billion euros after the close of trading yesterday. That compares with 2.48 billion euros a year earlier.

Iberdrola’s Plans

Scottish & Southern Energy Plc rose 1.6 percent to 1,372 pence after Expansion reported that Iberdrola SA is considering a takeover bid for the U.K. utility or a merger with Germany’s RWE AG to dilute Actividades de Construccion y Servicios SA’s stake of about 20 percent in the company.

The newspaper cited people in the banking industry without naming them. An Iberdrola spokesman declined to comment on Expansion’s report. The Spanish company lost 1.2 percent to 6.16 euros, while RWE slid 1.4 percent to 43.22 euros.

3i Group Plc surged 8.2 percent to 293.9 pence after Britain’s biggest publicly traded private equity firm said the value of its assets increased by 9.4 percent as economic growth in emerging economies boosted the earnings of the companies that it owns.

Sky Deutschland AG jumped 6.9 percent to 3.42 euros after the pay-TV operator posted a first-quarter loss before interest, taxes, depreciation and amortization that narrowed to 55 million euros. The broadcaster lost 64.5 million euros on the same basis a year earlier.

--Editors: Will Hadfield, Andrew Rummer

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

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Most European Stocks Advance; Maersk, Hermes Gain on Earnings

May 11, 2011, 6:24 AM EDT By Julie Cruz

May 11 (Bloomberg) -- European stocks rose for a second day as better-than-estimated results from A.P. Moeller-Maersk A/S to Hermes International SCA boosted confidence in the economic recovery. Asian shares and U.S. index futures also gained.

Maersk jumped 4.1 percent as the owner of the world’s largest container line said net income surged 85 percent. Hermes gained 3.3 percent after sales increased as wealthy consumers purchased more luxury watches and fragrances. ITV Plc slid 2.6 percent as the U.K.’s biggest commercial broadcaster forecast slowing advertising revenue growth.

The benchmark Stoxx Europe 600 Index advanced 0.6 percent to 284.66 at 11:01 a.m. in London. The gauge has gained 8.6 percent from this year’s low on March 16 as companies including PSA Peugeot Citroen and Ericsson AB reported results that topped analysts’ estimates and the U.S. Federal Reserve maintained its pledge to keep interest rates low for an extended period.

“Outlook statements from companies are more positive than expected, showing companies are really confident,” said Matthias Joerss, a Frankfurt-based strategist at Macquarie Group Ltd. “However, going forward, the earnings season will become less important and the sovereign debt crisis is still a main issue. We will also see slowing macroeconomic leading indicators.”

Standard & Poor’s 500 Index futures gained 0.3 percent today and the MSCI Asia Pacific Index advanced 0.6 percent.

Company Earnings

Of the 255 companies in the Stoxx 600 that have reported earnings since April 11, 148 have beaten analyst forecasts for per-share profit, according to data compiled by Bloomberg. That compares with 72 percent of U.S. companies in the period.

Company earnings offset reports from China’s statistics bureau and central bank showing inflation in the country held above 5 percent in April and lending exceeded analysts’ estimates, signaling that further monetary tightening may be needed to cool the fastest-growing major economy. Consumer prices rose 5.3 percent from a year earlier and banks extended 740 billion yuan ($114 billion) of local-currency loans.

Another release today showed German inflation accelerated more than initially estimated in April after energy costs surged. The inflation rate, calculated using a harmonized European Union method, jumped to 2.7 percent from 2.3 percent in March, the Federal Statistics Office in Wiesbaden said.

The Bank of England said the outlook for growth has deteriorated in the past three months and that it sees inflation “markedly higher” in the near term. The central bank said inflation may reach 5 percent later this year.

Greek Aid

European leaders slowed debt-wracked Greece’s drive for extra aid, saying the Athens government must first make good on pledges to overhaul an economy mired in a three-year recession. German Chancellor Angela Merkel said Greece needs to meet strict terms to deserve credits beyond the 110 billion-euro ($158 billion) lifeline granted a year ago.

“We can offer solidarity only if Greece’s stability and eagerness to reform is proven,” Merkel told reporters in Berlin yesterday. “We can get out of this difficult situation only if we properly rebuild that foundation, not just help without Greece doing anything.”

Maersk jumped 4.1 percent to 51,350 kroner. The company posted first-quarter net income before minority interests of 6.35 billion kroner ($1.2 billion), compared with an average estimate of 4.89 billion kroner in a Bloomberg survey of five analysts.

Hermes, Storebrand Gain

Hermes rallied 3.3 percent to 167.10 euros, the highest price since October. The French maker of Birkin handbags and silk scarves reported first-quarter sales that increased 26 percent, beating analysts’ estimates.

Storebrand ASA gained 1.6 percent to 51.65 kroner as Norway’s largest publicly traded insurer said the developments in financial markets thus far in 2011 provide a basis for continued positive growth in its core markets.

Bourbon SA rose 5.4 percent to 34.35 euros in Paris trading, the largest gain in seven months. The owner of the second-biggest fleet of supply and crew ships for the oil industry reported a 24 percent increase in first-quarter revenue and said demand is being boosted by the price of crude and investments by oil companies.

Axel Springer AG jumped 3.8 percent to 112 euros after Europe’s largest newspaper publisher said first-quarter profit before some items rose 6.5 percent as international and online business revenue made up for a weaker German advertising market.

ITV slid 2.6 percent to 73.9 pence as the broadcaster forecast first-half advertising revenue growth will slow and it may underperform the market as clients cut spending budgets.

--Editor: Andrew Rummer

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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