11 Mar 2010
March 11 (Bloomberg) -- European stocks fluctuated as basic-resource producers fell on speculation rising inflation will prompt China to pare back stimulus measures, offsetting gains by auto shares and retailers. Asian equities advanced.BHP Billiton Ltd., the world's largest mining company, slid 2.4 percent as China's inflation reached a 16-month high. Lagardere SCA slumped the most in 10 months after France's biggest publisher reported earnings that missed analysts' estimates. Volkswagen AG, Europe's largest automaker, rallied 3.2 percent as sales gained. Home Retail Group Plc led retail shares higher.
The Stoxx Europe 600 Index fell less than 0.1 percent to 258.2 at 11:30 a.m. in London, having swung between gains and losses at least 12 times. The benchmark gauge for European equities has soared 63 percent from a 12-year low last March as governments and central banks around the world maintained low interest rates and committed more than $12 trillion to stimulate the economy.
"It's difficult to find alternatives to equities as they are still supported by low interest rates," said Rudolf Buxtorf, who helps manage about $500 million at RBS Coutts Bank in Zurich. "The negative sentiment since the height of concerns over Greece has improved. The problems of European countries won't derail the economy."
Greece's unions will shut down hospitals, airports and schools today in the country's second general strike this year to protest Prime Minister George Papandreou's latest round of budget cuts to reduce Europe's biggest deficit. The Stoxx 600 has surged 8.7 percent since Feb. 5 on speculation the European Union will support Greece if required.
‘Shock to Public Finances'
Even so, Mohamed A. El-Erian, whose company runs the world's biggest mutual fund, said worsening government finances may affect the global economy more than is currently realized.
"The importance of the shock to public finances in advanced economies is not yet sufficiently appreciated and understood," El-Erian, co-chief investment officer at Pacific Investment Management Co., wrote in an article on the Financial Times Web site. The potential damage from increased government borrowings is "at present being viewed primarily -- and excessively -- through the narrow prism of Greece."
The MSCI Asia Pacific Index rose 0.3 percent as speculation Japan's economy is recovering outweighed a retreat by commodity- related companies. Futures on the Standard & Poor's 500 Index fell 0.2 percent before a report on U.S. jobless-benefit claims.
Chinese Inflation
Chinese inflation reached a 16-month high in February, industrial output climbed and new loans exceeded forecasts, adding to the case for the government to reduce stimulus measures. In Japan, the government will probably upgrade its overall assessment on the nation's economy for the first time since July, the Nikkei said today, without identifying the source of the information.
BHP Billiton fell 2.4 percent to 2,193 pence as copper declined for a second day in London.
Kazakhmys Plc slipped 2.5 percent to 1,507 pence. Goldman Sachs Group Inc. removed Kazakhstan's biggest copper miner from its "conviction buy" list and reduced its recommendation to "neutral."
Lagardere sank 7.4 percent to 26.39 euros, the biggest intraday drop since May 13. Full-year adjusted net income, excluding the company's stake in European Aeronautic, Defence & Space Co., fell 9.5 percent to 324 million euros ($442.5 million). Analysts had predicted profit of 374 million euros, according to the average of 10 estimates compiled by Bloomberg.
VW Climbs
Volkswagen rallied 3.2 percent to 65.80 euros. The carmaker said two-month sales across its nine brands, excluding truckmaker Scania AB, surged 27 percent, helped by growing demand in emerging markets. The increase outpaced a 20 percent gain in the global market in the period, the company said.
Pirelli & C. SpA, Europe's third-largest tiremaker, increased 1.6 percent to 43.4 euro cents. Mediobanca SpA upgraded the shares to "outperform" from "neutral," citing a "deeply improved outlook."
Home Retail, the U.K. owner of Argos catalog stores, advanced 1.9 percent to 273 pence. The company forecast pretax profit for the year of about 290 million pounds ($437 million), "slightly ahead" of analysts' forecasts.
Old Mutual Plc, the biggest insurer in Africa, slid 2.8 percent to 120.2 pence after posting a full-year loss. The company, whose shares had climbed for nine straight days before today's results, also said it may sell its unprofitable U.S. Life business and pay its first dividend since 2008.
Geberit, GEA
Geberit AG declined 3.6 percent to 187.7 Swiss francs. Europe's biggest maker of toilet-flushing systems expects construction to fall further in Europe and North America, Chief Executive Officer Albert Baehny said, adding the company has seen no meaningful impact from government stimulus packages.
GEA Group AG, whose machines milk a third of the world's dairy cows, surged 7.2 percent to 16.30 euros, the biggest gain since July. The company said full-year net income rose 60 percent to 161.7 million euros and predicted higher order intake for this year and a "stabilization" of sales.
Safran SA jumped 2.4 percent to 18.19 euros. Europe's second-largest maker of aircraft engines was raised to "outperform" from "underperform" at Exane BNP Paribas.
Devon Energy Corp. climbed 5.8 percent to $76 in pre-market trading in New York. BP Plc will pay the U.S. oil- and natural- gas producer $7 billion for assets in Brazil, the Gulf of Mexico and Azerbaijan, adding fields that may extend its production lead over Exxon Mobil Corp.
BP, Europe's largest oil and gas company, slipped 0.3 percent to 623 pence.
A Labor Department report at 8:30 a.m. in Washington may show initial U.S. jobless applications fell by 9,000 to 460,000 in the week ended March 6, according to the median forecast of 45 economists in a Bloomberg survey. Another report might show the U.S. trade deficit widened in January for a third month.
