Barefoot Investor: European Stocks Rebound From Two-Year Low

European stocks rebounded from a two-year low amid speculation the Federal Reserve may this week signal additional measures to stimulate the economy. U.S. index futures rose while Asian shares fell.

Eni SpA (ENI) and Petrofac Ltd. (PFC) led a rally in oil companies, both rising more than 3 percent, amid speculation the civil war in Libya may be drawing to a close. Petropavlovsk Plc (POG) jumped 5.9 percent as Citigroup Inc. recommended the gold producer. Jyske Bank A/S dropped 1.3 percent after Denmark’s second-largest lender reported profit that missed estimates.

The benchmark Stoxx Europe 600 Index gained 1.2 percent to 225.88 at 9:56 a.m. in London, having earlier lost 0.8 percent. The gauge fell 6.1 percent last week, extending its decline from this year’s high to 23 percent, as Europe and U.S. economic data added to concern the global recovery is at risk.

Standard & Poor’s 500 Index futures climbed 1 percent today after the benchmark gauge tumbled 4.7 last week. The MSCI Asia Pacific Index retreated 1 percent today.

Jackson Hole

The Fed holds its annual symposium in Jackson Hole, Wyoming, this weekend. This time last year Chairman Ben S. Bernanke hinted that the U.S. central bank might embark on a second round of asset purchases, kicking off a 28 percent rally in the S&P 500 that ended in a three-year high on April 29.

Record-low yields on Treasuries show traders expect Fed Chairman Ben S. Bernanke to signal the central bank will begin a third round of asset purchases to boost the economy. Barclays Plc said 10-year yields indicate traders have priced in $500 billion to $600 billion of bond purchases by the Fed. Citigroup Inc. said current rates can only be justified by more bond buying or assuming the economy will shrink by 2 percent.

Gains in European shares were limited as German Chancellor Angela Merkel resisted calls for common euro-area borrowing amid mounting concern the economic recovery is at risk. Speaking in an interview with ZDF television from the chancellery in Berlin yesterday, she said bringing in euro bonds at this time would further undermine economic stability.

Eni Advances

Eni, the Italian oil company that was the biggest foreign producer in Libya, rallied 5.2 percent to 13.13 euros after rebel fighters reached the capital Tripoli. The overthrow of Muammar Qaddafi’s government may allow Eni and other oil producers to start fields closed by the civil war.

Petrofac, which said today it expects to bid for work in Libya after the end of the conflict, rallied 3.4 percent to 1,208 pence. The oilfield-services provider also reported first- half earnings rose 6.6 percent to $246.3 million.

Total SA (FP), France’s largest oil company, climbed 2.8 percent to 32.89 euros and BP Plc (BP/) gained 1.9 percent to 397.25 pence.

Petropavlovsk jumped 5.9 percent to 777 pence as Citigroup upgraded the producer of gold in Russia to “buy” from “hold” and the precious metal rallied for a sixth day to a record.
IG Group Gains

IG Group Holdings Plc (IGG) climbed 4.3 percent to 410.7 pence after the owner of the IG Index financial spread-betting brand said sales for the first quarter may increase by 19 percent as more people place bets because of recent market swings.

Revenue will rise to more than 94 million pounds ($155 million) for the quarter ending Aug. 31, from 79.1 million pounds a year earlier.

ICAP Plc (IAP), the world’s largest broker of trades between banks, gained 1.9 percent to 417.3 pence and Tullet Prebon Plc increased 1 percent to 333.2 pence.

Jyske Bank slid 1.3 percent to 155.70 kroner after Denmark’s second- largest lender reported second-quarter net income of 88 million kroner ($17 million) that missed the average analyst estimate of 260 million kroner, according to a Bloomberg survey.

Micro Focus International Plc (MCRO) slid4.51 percent to 251.5 pence after the company said it terminated talks with possible bidders. The U.K. software provider said it’s restarting a program to buy back as many as 12.3 million shares under its existing authority. (Bloomberg)


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