Thursday, May 7, 2009

European Stock Futures, Asian Shares Rise; UBS, Banks May Gain

By Sarah Jones

May 7 (Bloomberg) -- European stock-index futures and Asian shares climbed on speculation that American banks don’t need as much capital as earlier projected and growing signs the worst of the global recession may be over.

UBS AG and Deutsche Bank AG may climb after U.S. Treasury Secretary Timothy Geithner said today’s bank stress tests results will be “reassuring.” Anheuser-Busch InBev NV might advance as the world’s biggest brewer said first-quarter profit almost doubled, beating analysts’ estimates. Barclays Plc may move after the U.K.’s third-largest bank reported higher profit.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, added 1.2 percent to 2,428 at 7:52 a.m. in London. The U.K.’s FTSE 100 Index is set to open 29 points higher, according to CMC Markets.

“The fact that more details are emerging with regard to the U.S. bank stress tests is improving sentiment,” said Matt Buckland, a London-based dealer at CMC. “The fact the capital shortfalls will be quantified is certainly welcomed news.”

Federal Reserve stress tests on the 19 biggest lenders show Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. together require about $54 billion, according to people familiar with the conclusions. Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of New York Mellon Corp. have enough capital to help prop up flows of credit to businesses and consumers.

Geithner, Fed Chairman Ben S. Bernanke, Federal Deposit Insurance Corp. Chairman Sheila Bair and Comptroller of the Currency John Dugan are scheduled to brief reporters in Washington before the 5 p.m. release of the results.

‘Significant Cushions’

“There is very significant cushions in these institutions today, and all Americans should be confident that these institutions are going to be viable institutions going forward,” Geithner said yesterday in an interview with PBS television’s Charlie Rose program.

U.S. stocks rallied to a four-month high yesterday, led by banks, as details of the Fed’s stress tests trickled out. Citigroup surged 17 percent as people familiar with the matter said the lender needs only about $5 billion. Futures on the Standard & Poor’s 500 Index slipped less than 0.1 percent today, while the MSCI Asia Pacific Index jumped 3 percent.

Europe’s Stoxx 600 has advanced 32 percent since March 9 as earnings at companies from Credit Suisse Group AG to Siemens AG beat analysts’ estimates and investors speculated that the U.S. government’s plan to finance the purchase of illiquid assets from banks will help to pull the global economy out of its first recession since World War II.

UBS, Barclays

American depositary receipts of UBS, the largest Swiss bank by assets, rose 4.1 percent from yesterday’s close in Zurich. U.S.-traded securities of Deutsche Bank, Germany’s largest bank, increased 4.5 percent.

Barclays may move after the lender said first-quarter net income rose 12 percent to 826 million pounds ($1.25 billion).

Societe Generale SA may be active after France’s third- largest bank reported a first-quarter loss of 278 million euros ($370 million) on writedowns linked to U.S. bond insurers and higher provisions for risky loans. Analysts surveyed by Bloomberg had estimated Societe Generale would post a profit of 332 million euros.

AB InBev may climb. The brewer posted a first-quarter profit of $716 million as sales increased and costs declined after the $52 billion merger that formed the company. That beat the $484 million median estimate of eight analysts surveyed by Bloomberg.

KKR & Co. has also agreed to pay $1.8 billion for the South Korean beer unit of AB InBev, which will use the money to pay down debt.

Deutsche Telekom

Deutsche Telekom AG might be active after Europe’s biggest telephone company reported a first-quarter loss because the U.K., Polish and U.S. wireless units were hurt by currency fluctuations and the economic slowdown.

Zurich Financial Services AG may fall after Switzerland’s biggest insurer said first-quarter profit dropped 75 percent to $362 million, hurt by losses on investments. Earnings compare with the $334 million median estimate of four analysts surveyed by Bloomberg.

Axa SA may be active after Europe’s second-biggest insurer said first-quarter revenue dropped 1.7 percent to 27.6 billion euros on lower fees from asset management and after the financial crisis curbed demand for life-insurance policies. That’s in line with analysts’ estimates of 27.3 billion-euro, according to a Bloomberg survey. Revenue from asset management declined 29 percent.


Unilever might move after the world’s second-largest maker of consumer goods said first-quarter profit fell 45 percent to 731 million euros after shoppers in western Europe sought cheaper alternatives to the company’s Knorr soups and Dove soaps. That trailed the median 789 million-euro estimate of eight analysts surveyed by Bloomberg.

The European Central Bank, which meets in Frankfurt today, will probably cut its key interest rate by a quarter point to 1 percent and offer banks longer-term loans to stem the region’s recession, according to all 53 economists in a Bloomberg News survey. The ECB announces its decision at 1:45 p.m. in Frankfurt and Trichet holds a press conference 45 minutes later.

Separately, the Bank of England will probably hold its key rate at 0.5 percent. That decision is due at noon London time.

No comments: