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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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Lagarde May Stake French Claim as First Female IMF Chief

May 19, 2011, 10:05 AM EDT By Mark Deen

(Updates with bookmaker’s odds in 14th paragraph.)

May 19 (Bloomberg) -- France may have to rely on Christine Lagarde’s track record as a euro crisis fighter if she’s to become the International Monetary Fund’s first female chief after the resignation of her compatriot Dominique Strauss-Kahn.

Lagarde, 55, has the negotiating skills and an understanding of Europe’s sovereign-debt crisis needed for the post, say analysts including Charles Grant at the Centre for European Reform. IMF shareholders will assess if those qualities are enough to allow France to keep the job for itself after securing four out of the 10 managing directors since 1946.

“We should choose the best candidate, whether European, Antarctican or Uruguayan,” said Grant, executive director of the London-based research group. “The French have a record of strong candidates and the obvious one now would be Lagarde.”

The next IMF chief will be at the center of debates on determining a course for the euro region out of the sovereign debt crisis that still threatens to push the likes of Greece, Ireland and Portugal into default. Strauss-Kahn’s successor will also have to restore the Washington-based fund’s image after the former French finance minister was forced to quit today after being charged with attempted rape and other offenses in New York.

Strauss-Kahn, 62, finance minister from June 1997 to November 1999, was arrested May 14 on sexual-assault charges and is currently detained at Rikers Island prison in New York. He denies the allegations.

Jockeying Begins

Jockeying for Strauss-Kahn’s succession has already begun. European officials have closed ranks to defend their region’s 65-year hold over the top job of the fund, which has never had a female chief. Finance ministers from Sweden to Spain say the region needs one of its own to get a handle on its debt crisis.

“Christine Lagarde has outstanding credentials,” Swedish Finance Minister Anders Borg said today in an interview with Bloomberg Television. “She has a lot of experience in these matters.” Borg also said the IMF may benefit from having a woman at the helm. “The fact that half of the world has not been represented as managing director” gives Lagarde’s candidacy an additional “advantage.”

Lagarde declined to address her own candidacy today, telling reporters in Paris that the next IMF chief should come from Europe.

“Any candidate needs to come from among the Europeans,” she said.

Lagarde is among those with the “truly extraordinary profile” needed for the IMF job, especially for Europeans, said Jacob Kirkegaard of the Peterson Institute in Washington. She may be “brought into play not as a northern European candidate but as the first female head.”

Bridging Divides

A lawyer who became the first female chairman of Chicago- based firm Baker & McKenzie LLP, Lagarde was appointed as finance minister by French President Nicolas Sarkozy in 2007, just before the onset of the financial crisis.

Lagarde’s negotiating abilities helped clinch agreement on the euro area’s sovereign bailout fund announced in the early hours of May 10 last year, according to a person who was there. The 16-member group’s finance ministers worked through the night to create a 750 billion-euro fund ($1.07 trillion) to support financially distressed governments and hold the bloc together.

A fluent speaker of English, Lagarde attended a year of high school as an exchange student at Holton Arms, a private girls’ school in Bethesda, Maryland. An avid swimmer, she was selected for the French national synchronized swim team when she was 15 and competed internationally for two years.

Judicial Inquiry

Lagarde is the favorite for the job, according to odds at London-based bookmaker William Hill Plc said today. It is offering six pounds ($9.71) for every four bet that Lagarde will be the next IMF head, down from odds of 20-1 previously.

Lagarde still faces legal challenges of her own that could overshadow any candidacy. Jean-Louis Nadal, the public prosecutor attached to France’s highest appeals court, this month requested a judicial inquiry into whether she abused powers in reaching a settlement with businessman Bernard Tapie. Lagarde says the allegations are without foundation.

Her potential candidacy faces opposition from nations including South Africa and Russia. Trevor Manuel, head of South Africa’s National Planning Commission, is “highly respected in the world,” Finance Minister Pravin Gordhan said in Pretoria yesterday. Russian central bank Deputy Chairman Sergei Shvetsov said a developing country should be given the chance to run the IMF to better reflect their role in global trade.

‘Disproportionate’

“For a long time people have been saying there have been a disproportionate number of Frenchmen at the top of international organizations,” said John Llewellyn, a researcher at Chatham House in London and a former official at the Paris-based Organization for Economic Cooperation and Development.

Former U.K. Chancellor of the Exchequer Alistair Darling, Bank of Canada Governor Mark Carney and Kemal Dervis, an ex- Turkish economics minister, would be other possible candidates, economists said.

Emerging nations have nevertheless failed to indicate they will rally behind one candidate. That may leave the way open for Europe to get a lock on the position again.

“The way should be open to everybody,” said Uri Dadush, director of international economics at the Carnegie Endowment for International Peace in Washington. Still, “Christine Lagarde would be also an outstanding candidate. She should be put up on her own merits and may even prevail.”

--With assistance from Sandrine Rastello in Washington and Francine Lacqua in London. Editors: James Hertling, Jeffrey Donovan

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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Vinik’s U.S. Stock Holdings Jump 11-Fold During First Quarter

May 17, 2011, 12:53 PM EDT By Miles Weiss

May 17 (Bloomberg) -- Jeffrey Vinik, the Boston hedge-fund manager who formerly ran the Fidelity Magellan Fund, increased his U.S. stock holdings more than 11-fold during the first quarter with an emphasis on commodity-related shares.

Vinik, the manager of JNV Partners LP, held stocks with a market value of $4.66 billion at March 31, up from $411.8 million at Dec. 31, according to a Form 13F filed yesterday with the U.S. Securities and Exchange Commission. The largest bet was a $296 million stake in Oil Services HOLDR Trust, an exchange- traded fund that owns shares of companies involved in drilling and other exploration-related tasks, including Houston-based Halliburton Co. and Transocean Ltd. of Vernier, Switzerland.

Vinik, 51, is known for making big moves in and out of economic sectors by trading individual stocks and using leverage to amplify his bets. In recent years, he has also increased investments in ETFs, the term for funds that trade on stock exchanges, allowing investors to buy and sell them throughout the day.

Vinik did not immediately return a telephone call seeking comment. Mark Hostetter, the chief executive officer of Vinik Asset Management, declined to comment.

According to yesterday’s filing, Vinik invested in about 150 stocks as of March 31, up from 31 at the end of last year. He tripled his stake in Apple Inc. to 443,500 shares, acquired 800,000 shares of Deere & Co. and bought 1.25 million shares of FedEx Corp. with a stock-market value of $116.9 million at the end of the first quarter.

Buys SPDR Gold

Vinik’s holdings in energy, metals and natural resources stocks were valued at about $1.05 billion at March 31, up from about $39 million at Dec. 31, according to the filing. These holdings, which include a $111.9 million stake in the SPDR Gold Trust and $86.7 million of shares in the Brazilian mining company Vale SA, had declined in value by about 10 percent since March 31, based on yesterday’s closing prices.

Vinik managed Fidelity Magellan from July 1992 until May 1996, when it ranked as the world’s largest mutual fund with more than $56 billion in assets. He established JNV Overseas in 2004 to invest his own money along with cash from friends, family and a few outside investors, including billionaire George Soros, people familiar with the fund have said.

Money managers who oversee $100 million or more of equities traded on U.S. exchanges must file a Form 13F listing the holdings each quarter. The filing, which includes convertible bonds as well as funds and ETFs, is due 45 days after the quarter’s end.

--Editors: Steven Crabill, Josh Friedman

To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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