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Europe: Stocks advance on results, further stimulus speculation

Saturday, February 27, 2016 - 08:05

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[FRANKFURT] European stocks rose for a second day as investors assessed corporate results, and amid speculation that central banks will support global growth.

Eni SpA climbed 5.1 per cent after the Italian oil company's exploration and production division performed better than expected and output increased to the highest in five years.

BASF SE added 3 per cent after proposing a higher dividend. Gamesa Corp Tecnologica SA climbed 5.8 per cent after moving its earnings goals a year forward to 2016 on surging sales.

The Stoxx Europe 600 Index rose 1.5 per cent to 331.54 at the close of trading, with miners and energy stocks leading as commodities advanced. After paring gains of as much as 2.1 per cent to about 0.9 per cent, the Stoxx 600 extended its advance after a disappointing inflation reading for Germany.

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Separate data showed consumer prices in France and Spain missed estimates, strengthening the case for an expansion of the European Central Bank's monetary stimulus.

"With a lot of policy events coming there is a fair chance of more stimulus plans so the markets can squeeze higher," said Benno Galliker, a trader at Luzerner Kantonalbank AG.

"We had the chance to really sell off further after the horrible Wednesday, but the big reversal shows that there is some expectation building up into those events."

China's central bank governor said there's more room for monetary easing if needed, assuaging investor concern about the world's second-biggest economy.

After a global rout at the start of the year fueled by worries about China's slowdown and sliding oil prices, investors will look to the G-20 meeting in Shanghai for indications that policy makers are prepared to support growth. The ECB makes its next policy announcement on March 10.

The Stoxx 600 posted a second weekly increase, despite Wednesday's tumble. Gains in banks, miners and oil shares have trimmed its third monthly decline to 3.1 per cent . The gauge has still dropped 9.4 per cent this year, taking its slide from a record reached in April to 20 per cent amid concern over China's slowdown, routs in banks and oil, and wavering faith in central- bank support. It's trading at about 14.8 times estimated earnings, down from an April high of 16.7.

Greece's ASE Index posted the best performance among western-European markets with a 4.8 per cent jump. Eurobank Ergasias SA and Alpha Bank AE were among the biggest gainers, soaring 14 per cent.

Among other stocks moving on corporate news, Royal Bank of Scotland Group Plc tumbled 7.1 per cent after saying it would take longer than originally planned to resume shareholder payouts after reporting its eighth consecutive annual loss.

IAG SA slid 3.1 per cent after the owner of British Airways reported full-year earnings that missed the higher end of analyst estimates.

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