Monday, February 25, 2008

Stocks Rise in Europe, Asia, Led by UBS; U.S. Futures Advance

By Andreas Hippin

Feb. 25 (Bloomberg) -- Stocks gained in Europe and Asia, led by financial companies, on speculation bond insurers will avoid a cut in their credit ratings and limit further losses related to subprime-mortgage defaults. U.S. index futures advanced.

UBS AG and BNP Paribas SA led banks higher in Europe, while Millea Holdings Inc., Japan's biggest insurer, and Commonwealth Bank of Australia climbed in Asia. Royal Bank of Scotland Group Plc gained on expectations Qatar Investment Authority may buy a stake, while Alliance & Leicester Plc jumped on speculation it may get a bid from Lloyds TSB Group Plc. Genentech Inc. rose 9 percent in Frankfurt after winning approval to market its Avastin treatment for breast cancer.

The MSCI World Index added 0.7 percent to 1,459.56 as of 12:27 p.m. in London, while futures on the Standard & Poor's 500 Index increased 0.2 percent. The MSCI World Financials Index jumped 1.5 percent, the most in almost two weeks, as investors speculated Ambac Financial Group Inc. may get new capital.

``We're making our way toward a rescue plan for Ambac,'' said Salah Seddik, who helps oversee $5.9 billion at Richelieu Finance in Paris. ``This is reassuring and good news for financial stocks. It means that in terms of writedowns, the worst is behind us.''

Speculation that companies in the bond-insurance industry may not be able to maintain the AAA credit ratings they rely on to insure about $2.4 trillion in securities has contributed to an 8.1 percent decline in the MSCI World this year.

Europe's Dow Jones Stoxx 600 Index advanced 1.5 percent, with all 18 national markets gaining. Germany's DAX added 1.2 percent, while France's CAC 40 rose 1.7 percent. The U.K.'s FTSE 100 jumped 1.6 percent.

Asian Indexes

The MSCI Asia Pacific Index climbed 1.4 percent. Japan's Nikkei 225 Stock Average increased 3.1 percent to 13,914.57, the highest close since Jan. 15.

UBS, Europe's largest bank by assets, rallied 4 percent to 37.1 Swiss francs. BNP Paribas, France's biggest bank, advanced 4.4 percent to 63.92 euros. Deutsche Bank AG, Germany's largest lender, gained 2.7 percent to 76.36 euros.

Millea jumped 8.9 percent to 4,030 yen, the most since Oct. 2. Commonwealth Bank, Australia's biggest mortgage lender, rose 4.9 percent to A$44.67.

Ambac may get $3 billion in new capital as part of a rescue agreement with banks, according to a person with knowledge of the discussions. Ambac spokeswoman Vandana Sharma declined to comment specifically on the discussions.

Bailout Plan

Stocks climbed in late trading in the U.S. on Feb. 22 after CNBC on-air editor Charles Gasparino said that a bailout may be announced this week, citing bankers working on the deal. Gasparino also said ``the entire deal could fall apart.''

``The efforts to prevent Ambac from collapsing will push the market up today, particularly financial stocks,'' said Erhan Aslan, a sales trader at Concord Investmentbank AG in Frankfurt.

Royal Bank of Scotland rallied 7.3 percent to 405.5 pence. The Qatari government is considering an investment in the U.K.'s second-largest bank, the Sunday Telegraph Business reported, citing unidentified people with knowledge of the matter.

Alliance & Leicester gained 8.3 percent to 552.5 pence, and Bradford & Bingley Plc jumped 7.2 percent to 202 pence.

Lloyds TSB, the biggest U.K. provider of personal loans, is in the ``early stages'' of assessing approaches to smaller rivals Alliance & Leicester and Bradford & Bingley, the Sunday Telegraph reported, citing unidentified people close to the bank.

Considering Acquisitions

RBS spokeswoman Carolyn McAdam, Lloyds TSB spokeswoman Kirsty Clay and Alliance & Leicester spokesman Stuart Dawkins declined to comment today. QIA board member Hussain al-Abdulla couldn't immediately be reached for comment at his Doha office.

Lloyds TSB will consider acquisitions in the U.K., Chief Executive Officer Eric Daniels said on Feb. 22. Lehman Brothers Holdings Inc. raised its recommendation on the stock to ``overweight'' from ``equal weight.'' The shares increased 2.9 percent to 470.75 pence.

Genentech rallied $7.37 to $78.97 in Frankfurt. The company may add more than $700 million in sales this year after it won U.S. approval to market Avastin for breast cancer treatment.

Avastin generated $2.3 billion in U.S. sales in 2007. Switzerland's Roche Holding AG, Genentech's largest shareholder, markets Avastin outside the U.S.

Roche, the world's biggest maker of tumor treatments, rose 4.1 percent to 204.2 francs, the most in six weeks.

Solarworld AG gained 3.3 percent to 33.06 euros after UBS analysts upgraded shares of the solar-energy company to ``buy'' from ``neutral.''

Munich Re

Munich Re advanced 1.9 percent to 118.85 euros. The world's second-biggest reinsurer forecast profit of 3 billion euros ($4.44 billion) to 3.4 billion euros this year and said operating profit beat analysts' estimates. Fourth-quarter subprime losses were 15 million euros, reducing the remaining exposure to 340 million euros, Chief Financial Officer Joerg Schneider said.

``Munich Re is a proxy for the state of the industry as a whole,'' said Wolfgang Matejka, who oversees $3 billion as chief investment officer at Vienna-based Meinl Bank AG, in a Bloomberg Television interview. ``The company made a significant step to improve transparency. Investors appreciate this.''

Allianz SE, Europe's largest insurer, jumped 2.7 percent to 119.30 euros. Dresdner Bank AG, the German banking arm of Allianz, is sticking to its medium-term profitability and cost targets after 1.3 billion euros in U.S. subprime-related writedowns.

Renault, Daimler

Renault SA and Daimler AG led shares of carmakers higher after strategists at Lehman Brothers raised their allocation for the industry to ``overweight'' in their European equity portfolio.

A slowdown in sales growth is ``well reflected in valuation and earnings,'' Ian Scott and Jane Pearce, London-based equity strategists, wrote in a report today. Previously, car stocks were not represented in the recommended portfolio, the note said.

Renault advanced 2.4 percent to 71.41 euros, and Daimler gained 1.5 percent to 55.93 euros.

Hammerson Plc, the British developer that owns Birmingham's Bullring and London's Brent Cross shopping centers, jumped 6 percent to 1,122 pence after the company's 2007 net asset value beat analysts' estimates

Hammerson said net asset value increased 3 percent to 15.45 pounds a share last year. John Perry, an analyst at Deutsche Bank in London, had estimated net asset value of 15.12 pounds.

Premier Foods Plc, the maker of Hovis bread, plummeted 9.2 percent to 96.23 pence, the steepest loss in the Stoxx 600 today. ABN Amro Holding NV is managing the sale of 15 million shares in the company at a 9.4 percent discount to last week's close. The bank is offering the shares at 96 pence each, according to details of the sale e-mailed to clients and obtained by Bloomberg News.

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