European stocks climb after S&P upgrades Greece
European stocks climbed, with the Stoxx Europe 600 Index rising for a second day, as Standard & Poor’s raised Greece’s credit rating and investors awaited economic reports from the U.S. and Germany. U.S. index futures were little changed, while Asian shares rose.
SAP AG (SAP) climbed after rival Oracle Corp. (ORCL) posted fiscal second-quarter sales and profit that exceeded analysts’ estimates. Merck KGaA (MRK) lost 3.4 percent after its Stimuvax drug missed the main goal in a trial with lung-cancer patients.
The Stoxx 600 added 0.2 percent to 280.99 at 8:34 a.m. in London. The equity benchmark has rallied 15 percent this year as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases. Futures on the S&P 500 Index expiring in March increased 0.1 percent. The MSCI Asia Pacific Index rallied 1.1 percent and the Nikkei 225 Stock Average jumped 2.4 percent amid optimism the Bank of Japan will opt for further monetary stimulus when it concludes a two-day policy meeting on Thursday.
“We continue to be driven higher by the belief that we are fast approaching an agreement between the Democrats and the Republicans on the U.S. fiscal cliff,” Zahid Mahmood, a trader at Capital Spreads wrote in an e-mail. “There are also broader factors at play at the moment that have helped contribute to the traditional Christmas rally. These include additional economic stimulus from the U.S. Federal Reserve and Bank of Japan and economic figures that are showing the most major global economies may be turning a corner for the better.”
The Stoxx 600 rose for the first time in four days on Tuesday as Obama changed his position on tax increases. That lead to optimism U.S. lawmakers will agree on a compromise budget, preventing more than $600 billion of automatic tax increases and spending cuts — known as the fiscal cliff — from coming into force at the beginning of next year.
The volume of shares changing hands in the Stoxx 600 was 54 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
Greece had its credit rating raised by S&P following the country’s debt buyback. The ratings company cited the determination of euro-area governments to keep Greece in the 17- nation currency zone.
S&P lifted the rating from selective default to B- with a stable outlook, it said in a statement on Tuesday. The new grade is the highest that the ratings company has used for Greece since June 2011, when it lowered the country to CCC from B.
German business confidence probably increased for a second month in December. The Ifo institute’s business climate index, based on a survey of 7,000 executives, will rise to 102 from 101.4 in November, according to the median forecast of 43 economists in a Bloomberg News survey. Sentiment dropped to a 2 1/2 year low in October. Ifo releases the report at 10 a.m. in Munich on Wednesday.
In the U.S., a Commerce Department report at 8:30 a.m. in Washington will show that housing starts fell to a 872,000 annual rate in November after reaching a four-year high of 894,000 in October, according to the median forecast of 85 economists. Building permits, a proxy for future construction, probably rose to an 875,000 annual pace.
“We have a number of key economic figures out today, which will be closely watched, to see whether the moves higher continue to be justified,” Mahmood wrote. “Among the most important will be the German IFO and U.S. housing starts. We can therefore expect another busy trading day.”
SAP advanced 0.9 percent to 61.25 euros after Oracle reported profit excluding some items of 64 cents a shares and adjusted revenue of $9.11 billion. That beat the average analyst estimates for profit of 61 cents and sales of $9.02 billion, according to data compiled by Bloomberg.
Merck fell 3.4 percent to 98.11 euros after saying that Stimuvax failed to significantly improve patient survival in a late-stage study of more than 1,500 patients.
[Bloomberg]
