[LONDON] European stocks headed for their biggest two-day gain in two weeks as companies from Bayer AG to PSA Peugeot Citroen reported better-than-estimated earnings and deals activity intensified.
Bayer and Peugeot rose more than 4 per cent. GlaxoSmithKline Plc climbed 3.6 per cent after the UK's biggest drugmaker posted second-quarter profit that declined less than analysts had estimated. Barclays Plc added 1.9 per cent and Numericable- SFR SAS added 3.2 per cent as profit rose. Italcementi SpA surged 49 per cent as HeidelbergCement AG said it will buy it. The German company lost 6.4 per cent.
The Stoxx Europe 600 Index gained 1 per cent to 393.88 at 4:33 pm in London. It rose for the first time in six days on Tuesday amid earnings that topped projections and takeover activity. Dealmaking is on track for the busiest third quarter on record, with volume set to surpass US$1 trillion.
"EPS and top line beats are quite good," said Tobias Britsch, who helps oversee about US$30 billion at Meriten Investment Management in Dusseldorf, Germany. "M&A activity will continue. It's companies making use of high cash piles to buy top-line growth to react to lower organic growth. But it's also them making use of the good financing environment to further develop their businesses. I would see it as more positive."
Quintain Estates & Development Plc jumped 23 per cent after a Lone Star Funds affiliate agreed to purchase it. Solvay SA slipped 3.1 per cent after agreeing to acquire Cytec Industries Inc for US$5.5 billion.
Man Group Plc rallied 7 per cent after the world's largest publicly traded hedge-fund firm posted first-half profit that beat analysts' expectations as performance fees almost doubled. British American Tobacco Plc gained 3.5 per cent and Royal KPN NV advanced 3.7 per cent after reporting earnings that topped analysts' estimates. LVMH Moet Hennessy Louis Vuitton SE advanced 1.9 per cent after posting its biggest earnings gain in three years. Total SA climbed 2.6 per cent as production and refining rose, almost making up for a crude price slump.
Volkswagen AG lost 2.3 per cent after lowering its global sales forecast amid a slowdown in China and challenging markets in Russia and South America. LafargeHolcim Ltd fell 2.7 per cent after as analysts said second-quarter earnings at Lafarge and Holcim were below consensus.
The Stoxx 600 is heading for a 3.3 per cent gain in July, after rebounding from a five-month low as concern that Greece may leave the euro faded. It's advanced 15 per cent this year.
Investors will also be watching for comments from the Federal Reserve, which releases its policy statement after the close of European markets on Wednesday.