Optimism Boosts European Shares
European stocks rebounded Tuesday as optimism about increased mergers and acquisitions in the financial industry boosted shares of Banco Bilbao Vizcaya Argentaria and Banca Popolare Italiana.
The Dow Jones Stoxx 600 index added 0.2% to 322.87 in London after earlier slipping 0.4%. It had its fifth day of gains, recouping some of last quarter’s slide, which was prompted by concerns about higher borrowing costs worldwide.
“It’s a good sign for stocks,” said Thierry Girardet, who helps manage the equivalent of $120 million in shares at Fival in Paris. “There’s a race to get bigger, and banks have to accompany their clients by growing.”
Trading was less than usual in Europe, with U.S. financial markets shut Tuesday for the Fourth of July holiday.
Stocks in Japan also rose, led by Toyota Motor after Asian carmakers grabbed more U.S. market share. DaimlerChrysler, whose U.S. sales lost ground, paced a decline by automotive shares in Europe.
Japan’s Nikkei 225 stock average added 0.4%, helped by a Credit Suisse Group recommendation that investors buy more of the nation’s equities.
Elsewhere in world markets, Mexico’s Bolsa index climbed for a fifth day, gaining 1.3%, after a preliminary vote count showed Felipe Calderon of the governing National Action Party ahead in the presidential election over Andres Manuel Lopez Obrador of the Party of the Democratic Revolution. Gainers included Grupo Financiero Banorte, the country’s fifth-largest bank, and Grupo Mexico, a copper miner.
In Canada, the Standard & Poor’s/TSX composite index climbed 1% as oil traded near a seven-week high and higher prices for metals lifted shares of Suncor Energy and Teck Cominco.
National benchmarks gained in 13 of the 18 Western European markets. Benchmarks declined in Luxembourg, Britain, Portugal, Belgium and Austria. Germany’s DAX added 0.3%, as did Spain’s IBEX 35.
BBVA, Spain’s second-largest bank, rallied 1.9% after traders reported speculation of a merger with HSBC Holdings, Europe’s biggest bank by market value. Both banks declined to comment.
Credit Agricole, France’s largest bank, jumped 2%. The bank has yet to reach a decision on whether to make an offer for British mortgage lender Alliance & Leicester, Chairman Rene Carron said. The bank will stick to its offer for Greek lender Emporiki Bank for about 2.8 billion euros, or $3.6 billion.
Italy’s Banca Popolare Italiana added 0.3%, extending Monday’s 5.7% gain after a report that the lender had been approached by three foreign banks seeking to buy it.
DaimlerChrysler dropped 1% after reporting a 15% slide in June sales in the U.S. for its Chrysler unit.
Adam Jonas, a Morgan Stanley analyst in London, cut the company’s share-price estimate by 8% and reduced earnings-per-share estimates for the next three years, citing a pessimistic outlook for Chrysler.
French carmaker Renault dropped 1.8%. General Motors’ board will resume discussions Friday on a proposal for an alliance with Renault and Nissan Motor, according to people familiar with the plans.
Automotive manufacturers may increase earnings this year by an average of 5.6%, less than half the growth projected for the Stoxx 600, according to analyst estimates compiled by FactSet Research Systems in London.
Carmakers “are seeing intense competition from the Far East,” said Hugh Cuthbert, an investment manager at SVM Asset Management in Edinburgh, who helps manage $1.9 billion in assets. “We view this industry with some suspicion.”
The number of shares traded in Britain, France and Germany was about 55% of the daily average this year, Bloomberg data showed.
Toyota Motor led Asian carmakers to an 11th consecutive month of market-share gains in the U.S. on demand for small, fuel-efficient cars.
The world’s second-largest automaker added 0.8% after lifting U.S. sales 14% last month from a year earlier.
“Asian carmakers have a good chance to perform well over the next few weeks,” said Christian Takushi, who manages about $600 million at Swisscanto Asset Management in Zurich.
The Morgan Stanley Capital International emerging markets index added 0.5% amid optimism about slowing inflation in Turkey and a growing economy in the Philippines.
