Asian Stocks Advance After U.S. Reports Lift Earnings Outlook

December 26, 2011, 3:17 AM EST By Yoshiaki Nohara

Dec. 26 (Bloomberg) -- Asian stocks rose, extending last week’s gain, as orders for U.S. durable goods and home sales climbed, boosting confidence in the world’s biggest economy and the earnings outlook for Asia’s exporters.

Fanuc Corp., a maker of factory robots that gets 75 percent of its sales outside Japan, rose 2.9 percent in Tokyo. CSR Corp., a trainmaker, dropped 7.3 percent in Shanghai after a report China’s railway ministry will cut construction spending. Mitsubishi Corp., Japan’s biggest commodities trader by revenue, rose 1.7 percent after prices of raw materials and metals increased. Woongjin Energy Co. slipped 7 percent in Seoul after clients canceled orders for solar-energy equipment.

“America is holding up amid concern Europe’s problems would drag the world down,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees the equivalent of $68 billion. “The U.S. economy will need policy backing to stand its ground. Moves in equities will be limited this week before investors start seeking a trend in the next year.”

The MSCI Asia Pacific Index gained 0.2 percent to 113.90 as of 4:20 p.m. in Tokyo, with eight out of the 10 industry groups advancing. The measure added 1.1 percent last week. The gauge has tumbled 17 percent this year amid concern Europe’s debt crisis will slow global economic growth.

Japan’s Nikkei 225 Stock Average rose 1 percent today after a public holiday on Dec. 23. Trading volume on the gauge was 51 percent below the 100-day average, according to data compiled by Bloomberg.

South Korea’s Kospi Index fell 0.6 percent, while China’s Shanghai Composite Index slipped 0.7 percent. Markets in Hong Kong, Australia and Singapore are shut today for holidays.

U.S. Data

The Standard & Poor’s 500 Index added 0.9 percent in New York on Dec. 23. as orders for durable goods rose in November by the most in four months and sales of new U.S. homes advanced last month to a seven-month high.

Stocks also gained after the U.S. Congress passed a two- month extension of a payroll tax cut. President Barack Obama signed the measure, and negotiators are making plans to start work on a longer-term deal.

‘Worst Avoided’

“There was a consensus that 2012 U.S. growth would fall,” said Naoki Murakami, chief economist at Monex Group Inc. in Tokyo. “The worst-case scenario has been avoided, and that’s a positive for stocks.”

Exporters to the U.S. advanced. Fanuc added 2.9 percent to 11,780 yen. Honda Motor Co., Japan’s second-largest carmaker by market value, rose 1.3 percent to 2,354 yen.

Stocks in the MSCI Asia Pacific Index were valued at 12.7 times estimated earnings on average as of Dec. 23, compared with 12.8 times for the S&P 500 and 10.5 times for the Stoxx Europe 600 index, according to data compiled by Bloomberg.

Utilities posted the biggest decline among the 10 industry groups in the Asia-Pacific gauge this year as Japanese power generators tumbled after meltdowns at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant.

Tepco, as the utility is known, lost 4.1 percent to 213 yen today after the Nikkei newspaper reported the company may seek several hundred billion yen in fresh aid to compensate nuclear disaster victims. Tepco received 890 billion yen ($11.4 billion) in state assistance last month.

Railway Stocks

CSR dropped 7.3 percent to 4.42 yuan after Xinhua News Agency said China’s railway ministry will reduce construction spending to 400 billion yuan ($63 billion) in 2012 from 469 billion yuan this year. China Railway Construction Corp. lost 1 percent to 3.99 yuan.

Mitsubishi Corp. climbed 1.7 percent to 1,539 yen after the Thomson Reuters/Jefferies CRB Index of raw materials added 0.1 percent on Dec. 23 and a gauge of prices for industrial metals advanced in London. Itochu Corp., a Japanese trading firm, rose 1.1 percent to 769 yen.

Woongjin Energy slipped 7 percent to 4,500 won after three clients canceled orders for solar-cell wafers because of the global economic slowdown and lower demand for alternative energy, according to regulatory filings.

--With assistance from Norie Kuboyama and Toshiro Hasegawa in Tokyo. Editors: Jim Powell, Jason Clenfield.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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

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U.S. Stocks Snap Three-Day Drop as Commodity Producers Advance

May 25, 2011, 1:38 PM EDT By Rita Nazareth

May 25 (Bloomberg) -- U.S. stocks advanced, with benchmark indexes snapping a three-day decline, as commodity shares rallied on expectations for higher raw material prices.

Schlumberger Ltd. and Halliburton Co. gained at least 1.5 percent as oil climbed following a report showing that U.S. distillate fuel supplies dropped to a two-year low. Freeport- McMoRan Copper & Gold Inc. advanced 2.1 percent as copper rose after Deutsche Bank AG said prices are likely to rebound. Fifth Third Bancorp led gains in financial institutions, rising 1.4 percent, as Fitch Ratings said it probably won’t downgrade German banks because of their holdings of Greek debt.

The Standard & Poor’s 500 Index added 0.3 percent to 1,320.37 at 1:13 p.m. in New York, after earlier falling as much as 0.3 percent. The Dow Jones Industrial Average rose 34.40 points, or 0.3 percent, to 12,390.61 today.

“The rally in stocks and commodities reflects the view that the global economic recovery is in place,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc. in Raleigh, North Carolina, which manages $4 billion. “There had been some concern about softness in recent data and that’s why we saw a pullback. Profits and margins should be sustained at these levels. The trend is higher and the rally will be driven by companies most-exposed to economic growth.”

Commodity Shares Slump

The S&P 500 fell 3.5 percent from an almost three-year high on April 29 through yesterday on concern about Europe’s debt crisis and weaker-than-forecast economic data. Indexes of commodity producers led the declines during that period, slumping at least 6.3 percent. Still, the benchmark gauge rose 4.7 percent since the end of 2010 through yesterday on government stimulus measures and higher-than-forecast profits.

Gauges of energy and raw material shares rose at least 1.3 percent today, the two-biggest gains in the S&P 500 within 10 industries. The Thomson Reuters/Jefferies CRB Index of 19 raw materials rallied 1.4 percent. Oil rose above $100 a barrel in New York. Copper gained the most in two months as Deutsche Bank said prices are likely to rebound, following similar comments from Goldman Sachs Group Inc. and JPMorgan Chase & Co.

Schlumberger, the world’s largest oilfield services provider, added 1.5 percent to $84.49. Halliburton rose 3.6 percent to $49.19 after Morgan Stanley raised its recommendation for the world’s second-largest oilfield services provider to “overweight” from “equal-weight.” Freeport, the largest publicly traded copper producer, gained 2.1 percent to $49.87.

‘Manageable’

Financial companies helped pace a rebound in benchmark indexes as Fitch Ratings said German banks have “manageable” risks related to Greek sovereign debt and the Mediterranean country’s economy.

“The worst consequence of any Greek sovereign default for German and other European banks would be a sharp increase in general capital market and creditor risk aversion at a time when many banks are still in rehabilitation mode,” Michael Dawson- Kropf, a Frankfurt-based analyst at Fitch, said in an e-mailed statement today.

Fifth Third Bancorp, Ohio’s largest lender, added 1.4 percent to $12.66, pacing gains in financial shares.

RF Micro Devices Inc. climbed 5.7 percent to $6.08. The U.S. maker of chips and radio systems for mobile phones was added to the focus list at Morgan Keegan.

Take-Two Interactive Software Inc. rose 3.1 percent to $16.59. The producer of the “Grand Theft Auto” video games reported a fourth-quarter loss, excluding some items, that was 55 percent narrower than the average analyst estimate.

Durable Goods

Stock futures extended declines before the start of regular trading as a report showed that orders for durable goods dropped more than forecast in April, reflecting less 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, a Commerce Department report showed. Economists projected a 2.5 percent drop in April, according to the median forecast in a Bloomberg News survey. A measure of demand for business equipment declined by the most this year.

Costco Wholesale Corp. lost 1.2 percent to $80.37. The largest U.S. warehouse-club chain reported fiscal third-quarter profit of 73 cents a share, missing the average analyst estimate by 4.8 percent.

AIG Slumps

American International Group Inc. declined 4.9 percent to $28.03. The Treasury sold 200 million shares yesterday at $29 each, compared with the closing price of $29.46 on the New York Stock Exchange. The government, which retains a majority stake, needs to sell shares at an average of about $28.73 to recover a $47.5 billion investment. AIG disposed of 100 million shares, raising $2.9 billion, according to a statement from the company.

AIG, once the world’s largest insurer, is seeking private capital after a government rescue that swelled to $182.3 billion, including Federal Reserve support. The Treasury in 2010 sold the last of its holdings in Citigroup Inc. and reduced its ownership in General Motors Co. to a minority stake. New York- based AIG is the only insurer that hasn’t repaid its bailout.

“Going out and standing on their own again is definitely what they want to do, and they’re beginning that process,” Cliff Gallant, a KBW Inc. analyst who rates AIG shares “underperform,” said in an interview. “The government can’t sell 90 percent in one swoop.”

--Editors: Joanna Ossinger, Michael Regan

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@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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Treasury Two-Year Notes Advance for Sixth Week on Fed Rate View

May 21, 2011, 12:55 AM EDT By Cordell Eddings

May 21 (Bloomberg) -- Treasury two-year notes rose for a sixth week in the longest winning streak since August as manufacturing and housing weakness reinforced bets that the Federal Reserve will keep borrowing costs low.

Benchmark 10-year securities advanced as New York Fed President William Dudley said the central bank is falling short of its goals because of the modest pace of the recovery, with unemployment too high and inflation likely to ease. The government will sell $35 billion of two-year notes, the same amount of five-year notes and $29 billion of seven-year notes next week in three daily consecutive sales starting May 24.

“The economic weakness continues to catch the market offside,” said Thomas di Galoma, managing director of U.S. government securities at Oppenheimer & Co. “ Quantitative easing hasn’t spurred as much economic activity as people had hoped, so the Fed will stay accommodative until things turn around.”

Two-year note yields dropped two basis points, or 0.02 percentage point, to 0.52 percent in New York, according to Bloomberg Bond Trader prices. The price of the 0.625 percent security maturing in April 2013 increased 1/32, or 31 cents per $1,000 face amount, to 100 7/32.

Yields on 10-year notes fell two basis points to 3.15 percent after touching 3.09 percent on May 18, the lowest level since Dec 7. The yields dropped that day to within a basis point of the 200-day moving average, then 3.08 percent.

U.S. bill rates were at almost record lows as government authorities curtailed short-term debt issuance to conserve borrowing capacity, with the U.S. reaching its federal borrowing threshold of $14.3 trillion.

U.S. Debt Limit

Treasury Secretary Timothy F. Geithner said this week that he has acted to stave off the federal debt limit until Aug. 2, using accounting measures that involve two retirement funds.

Six-month rates were at 0.09 percent, compared with the record low 0.0305 percent set May 6. Three-month bill rates were at 0.04 percent, almost the lowest level since they went negative during the financial crisis.

U.S. government notes advanced as reports showed manufacturing in the Philadelphia area expanded at the slowest pace in seven months and sales of existing homes in the U.S. unexpectedly fell.

The Philadelphia Fed’s factory index slid this month to 3.9, the lowest level since October, from 18.5 in April. Readings greater than zero signal expansion. Existing home sales fell 0.8 percent last month after a 3.5 percent increase in March, the National Association of Realtors reported. The median forecast of 75 economists in a Bloomberg News survey was for a 2 percent increase.

‘Headwinds to Growth’

“The economic data continue to underwhelm,” said Scott Graham, head of government bond trading at Bank of Montreal’s BMO Capital Markets unit in Chicago. “People are looking at the Fed, and the headwinds to growth continue to argue for them keeping rates lower for a longer period. We are at this level for a reason.”

Fed Chairman Ben S. Bernanke told reporters after the central bank’s April policy meeting that he was unsure when stimulus would end after a $600 billion program of debt buying stops in June. The central bank bought $18.52 billion of nominal Treasuries and inflation-index debt during the week to support the economy.

Interest-rate futures indicated yesterday a 30 percent chance that the central bank will increase the target lending rate at its March 2012 meeting, compared with 50 percent odds a month ago. The target rate for overnight lending between banks has stayed at zero to 0.25 percent since December 2008.

Dudley’s View

The central bank has “a considerable way to go” before it meets its dual mandate of full employment and price stability, Dudley said on May 19 in New Paltz, New York.

Yields on 10-year Greek debt surged yesterday as much as 59 basis points to a record 16.59 percent. The 10-year bund yield touched 3.05 percent, the lowest level since January.

Greece’s credit rating was cut three levels by Fitch Ratings, which said that even a voluntary restructuring of the country’s debt being considered by European Union policy makers would be considered a default. Fitch lowered its rating to B+, four levels below investment grade, from BB+ and said that the country may face a further reduction in its creditworthiness.

Spain’s Prime Minister Jose Luis Rodriguez Zapatero’s Socialists were headed for defeat in elections on May 22 after a week of protests over his economic policies, polls show. The Bundesbank said in a monthly bulletin that Germany’s economy will probably lose some growth momentum over the coming months after an “explosive” start to the year.

“Keeping an underlying bid in the market is the combination of global sovereign risk out of Europe, the Fed that is still buying, and a clearer picture of the economy that shows it is beginning to stumble,” said Larry Milstein, managing director of government and agency debt trading in New York at R.W. Pressprich & Co., a fixed-income broker and dealer for institutional investors.

--Editors: Dennis Fitzgerald, Dave Liedtka

To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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U.S. Stocks Advance Amid Dell Earnings as Commodities Rebound

May 18, 2011, 12:59 PM EDT By Rita Nazareth

May 18 (Bloomberg) -- U.S. stocks rose, snapping a three- day drop for benchmark indexes, as earnings at companies including Dell Inc. beat estimates and commodities rebounded.

Dell, the world’s second-largest computer maker, climbed 5.2 percent as corporate spending helped the company withstand a slump in consumer demand. Teen retailer Abercrombie & Fitch Co. added 2.5 percent as profit also beat estimates. Freeport- McMoRan Copper & Gold Inc. and Halliburton Co. rose at least 3.5 percent as commodities climbed for the first time in three days amid signs of increasing demand from emerging markets.

The Standard & Poor’s 500 Index advanced 0.5 percent to 1,335.93 at 12:36 p.m. in New York, after losing 1.5 percent over the last three days. The Dow Jones Industrial Average increased 33.07 points, or 0.3 percent, to 12,512.65 today. Energy shares led gains in the S&P 500 as oil rallied after an unexpected decline in inventories.

“I see a lot of green on my screen,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York, which manages $2 billion. “We got Dell as a turnaround story. Commodities were looking for an opportunity to bounce and traders will take advantage of it. Europe has somewhat kept a lid on the market. If we see defaults, it probably does ripple through the markets. Still, the defaults are likely to occur in smaller markets with limited global economic impact.”

Damped Optimism

The S&P 500 yesterday fell to a one-month low as a reduced sales forecast at Hewlett-Packard Co. and an unexpected decline in housing starts damped optimism about the economic recovery. The measure slid 2.5 percent through yesterday since climbing to an almost three-year high on April 29 amid concern about Europe’s debt crisis.

Still, the benchmark gauge advanced 5.7 percent in 2011 through yesterday amid government stimulus measures and higher- than-estimated corporate earnings. More than two-thirds of the 446 companies that reported results since April 11 topped the average analyst earnings projection, according to data compiled by Bloomberg.

“We’ve got good earnings surprises,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, who helps manage $275 billion. “The numbers will continue to be a lot stronger than people think. Of the developed world, I like the U.S. by far. From a 50,000 foot level, I’m avoiding Europe because they have a huge bunch of problems.”

‘Magical Thinking’

U.S. Treasury Secretary Timothy F. Geithner said budget deficits threaten to erode the nation’s economy and security and can’t be reduced with “magical thinking.” Geithner also said Europe has the capability to handle the region’s debt crisis.

“They just have to do it,” he said on a panel in New York after a screening of the HBO film “Too Big to Fail” yesterday.

European Central Bank officials ruled out a Greek debt restructuring, clashing with political leaders over a solution to the sovereign financial crisis.

“A Greek debt restructuring is not the appropriate way forward -- it would create a catastrophe” because it would damage the banking system, ECB Executive Board member Juergen Stark said today in Lagonissi, Greece. Fellow board member Lorenzo Bini Smaghi said in Milan that “a solution for reducing debt but not paying for it will not work.”

Squeeze More Profit

Dell climbed 5.2 percent to $16.73. It’s the second straight quarter that the company’s results outshined those of rival Hewlett-Packard Co. A slowdown in home-computer sales has roiled industry leader Hewlett-Packard, which cut its annual sales forecast yesterday. While Dell also saw its consumer revenue drop, the company said it was able to squeeze more profit out of each sale.

Abercrombie & Fitch rose 2.5 percent to $75.02. The teen retailer reported first-quarter earnings from continuing operations of 27 cents a share. On average, the analysts surveyed by Bloomberg estimated profit of 13 cents a share.

Gauges of energy and raw-materials producers rallied at least 1.6 percent, the two biggest gains within 10 S&P 500 groups. The S&P GSCI Index of 24 raw materials gained as much as 3 percent. Oil futures advanced 3.6 percent to $100.41 a barrel after Energy Department data showed an unexpected drop in U.S. inventories as refineries bolstered operating rates and imports declined.

Freeport, the world’s largest publicly traded copper producer, advanced 3.5 percent to $48.47. Halliburton added 3.8 percent to $47.05.

Staples Tumble

Staples Inc. tumbled 16 percent to $16.49. The office- supply retailer forecast 2011 earnings of $1.45 a share at most. On average, the analysts surveyed by Bloomberg estimated profit of $1.53 a share.

U.S. stocks are more vulnerable to a rising dollar than at any other time in the past four decades, according to Myles Zyblock, chief institutional strategist at RBC Capital Markets.

Through the first four months of the year, the Dollar Index dropped 7.7 percent. The indicator of the dollar’s value against the currencies of six major U.S. trading partners ended April at its low for the year. Since then, the index has risen as much as 3.9 percent.

“The dollar rally is a headwind” that may cause stocks to drop in the next three months, Zyblock wrote today in a report. By his reckoning, the so-called inverse correlation between the currency’s value and shares is the strongest since 1971.

Disappointing economic reports also indicate share prices are poised to fall, the report said. He cited a Citigroup Inc. index that compares indicators with estimates for 10 of the largest economies. The gauge fell last week to minus 23.7, its lowest reading in two years.

Zyblock recommended that clients add to investments in health care and consumer staples, such as food, beverages and tobacco. He also suggested that they reduce holdings of energy and raw-material producers, the “most susceptible to further increases in the dollar and/or global economic growth scares.”

--With assistance from David Wilson in New York. Editors: Joanna Ossinger, Jeff Sutherland

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

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