European Stocks Gain Before Greek Debt Swap

By Peter Levring - Mar 8, 2012 5:46 PM GMT+0800


European stocks rose for a second day as Japan’s economy shrank less than the government initially estimated and a deadline on Greece’s debt swap approached. Asian shares and U.S. index futures gained.

European Aeronautic, Defence & Space Co. rallied to a five- year high after doubling its dividend and predicting earnings will climb. Aviva Plc added 2.3 percent as the U.K.’s second- biggest insurer by market value reported operating profit that exceeded estimates. Enel SpA (ENEL), Italy’s biggest energy company, sank 5.9 percent after cutting its dividend.
Enlarge image A Pedestrian Passes The Aviva Plc Headquarters

The Stoxx Europe 600 Index (SXXP) advanced 1.3 percent to 263.44 at 9:44 a.m. in London. The benchmark gauge has surged 7.7 percent this year as the European Central Bank lent more than 1 trillion euros ($1.3 trillion) for three years to the region’s banks to ease liquidity.

“European equity markets are set to open higher as traders begin to turn optimistic over the Greek bond swap deal and the U.S. continues the string of strong economic data,” Jonathan Sudaria, a trader at Capital Spreads in London, wrote in e- mailed comments.

Standard & Poor’s 500 Index futures added 0.7 percent before a report at 8:30 a.m. in Washington that economists in a Bloomberg survey forecast may show initial claims for U.S. jobless benefits held at 351,000 last week. The MSCI Asia Pacific Index (MXAP) advanced 1.3 percent.
Japanese Economy

Japan’s economy contracted less than initially estimated last quarter, improving prospects for the recovery from last year’s earthquake. Gross domestic product shrank an annualized 0.7 percent in the three months ended Dec. 31, the Cabinet Office said, compared with a preliminary estimate of a 2.3 percent contraction. The median forecast of 21 economists surveyed by Bloomberg was for a 0.6 percent contraction.

Investors with about 60 percent of the Greek bonds eligible for the nation’s debt swap have so far indicated they’ll participate, putting the country on the verge of the biggest sovereign restructuring in history. The offer, which ends at 10 p.m. Athens time today, aims to reduce the 206 billion euros of privately held Greek debt by 53.5 percent.

ECB policy makers will keep the benchmark rate at a record low of 1 percent today, 55 of 58 economists in a Bloomberg News survey predict. The decision is due at 1:45 p.m. Frankfurt time and ECB President Mario Draghi will unveil the bank’s new economic projections at a 2:30 p.m. press conference.
ECB Forecasts

The bank is also expected to lift its 2012 inflation forecast above the 2 percent price-stability threshold today, limiting its ability to cut interest rates further even as it lowers the outlook for growth, economists said.

The Bank of England will today hold its key rate at 0.5 percent and maintain its commitment to buy an additional 50 billion pounds ($79 billion) of bonds by May after lifting its target for asset purchases to 325 billion pounds last month, according to economists. That decision is due at noon in London.

EADS rallied 9 percent to 29.25 euros, the highest price since May 2006. The maker of Airbus passenger jets agreed to pay a dividend of 45 cents a share, more than doubling the payout from last year and exceeding analyst estimates of a 30-cent dividend. Earnings before interest, taxes and one-time items will increase to more than 2.5 billion euros in 2012, from 1.8 billion euros last year, EADS said.

Aviva (AV/) increased 2.3 percent to 359.2 pence. The insurer reported operating profit that fell 2 percent to 2.5 billion pounds ($4 billion), surpassing the 2.45 billion-pound median estimate of analysts in a Bloomberg survey.
Gemalto, Klepierre

Gemalto NV (GTO) jumped 5.5 percent to 45.57 euros as the inventor of the smart chip used in bank and phone cards forecast revenue and operating profit will increase this year.

Klepierre (LI) SA, France’s second-largest publicly traded owner of shopping centers, climbed 5.6 percent to 24.70 euros. Simon Property Group Inc., the biggest U.S. mall owner, agreed to pay BNP Paribas SA 28 euros a share for 28.7 percent of Klepierre in a deal worth about 1.52 billion euros.

Deutsche Post AG (DPW) advanced 3.3 percent to 13.34 euros. Europe’s largest postal service said profit in 2012 will rise as much as 6.6 percent as growth in global trade helps the company’s DHL express and freight business.

Enel retreated 5.9 percent to 2.86 euros. The utility cut its dividend payout by a third to 40 percent of ordinary net income as it seeks to raise funds to cut debt.

Annual net income fell to 4.15 billion euros from 4.4 billion euros a year earlier, hurt by a windfall-profit tax imposed in Italy, the company said. That missed the 4.3 billion- euro average estimate of 17 analysts surveyed by Bloomberg.

Wirecard AG (WDI) sank 4.3 percent to 13.79 euros. The German provider of software and systems for online payments said it plans to sell 10.2 million new shares to fund acquisitions in the payment processing sector.