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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