European Stocks Rise as EON, Salzgitter Climb on Earnings

By Sofia Horta e Costa  

European stocks advanced on better-than-forecast earnings reports from EON SE and Salzgitter AG. U.S. index futures and Asian shares also gained.
EON, Germany’s largest utility, climbed 4.7 percent, while steelmaker Salzgitter AG rose 1.9 percent. Gagfah SA added 1.6 percent after the third-biggest German property company raised its 2014 earnings forecast for a second time. Swiss Life Holding AG (SLHN) increased 4.3 percent after posting first-half profit that exceeded estimates and saying it will buy real estate asset manager Corpus Sireo.
The Stoxx Europe 600 Index rose 0.4 percent to 330.07 at 8:56 a.m. in London. The benchmark has still fallen 5.6 percent from a six-year high on June 10 as U.S. President Barack Obama authorized air strikes against militants in Iraq and concern grew over fighting in Ukraine and Israel. Germany’s DAX dropped 10 percent from its record through the
end of last week, entering a correction.
Standard & Poor’s 500 Index futures gained 0.4 percent today, while the MSCI Asia Pacific Index climbed 0.3 percent.
“This could be the trough of European corporate earnings that we’ve all been waiting for,” Dirk Thiels, head of investment management at KBC Asset Management NV, said by phone from Brussels. “Since fundamentals have not changed and the global economy is still headed in the right direction, I see the recent correction as a buying opportunity.”

Earnings Estimates

European equities trade at 15 times their estimated earnings, down from a peak of 15.7 in July, data compiled by Bloomberg show. Profit for companies listed on the Stoxx 600 will probably climb 7.5 percent in 2014, according to estimates compiled by Bloomberg. Analysts had predicted growth of 14 percent at the beginning of this year.
Some 15 companies on the U.K.’s FTSE 100 Index (UKX) will trade without the right to their latest dividend today, shaving 21.92 points off the equity benchmark.
A report at 11 a.m. in Luxembourg will show that industrial output in the 18-nation euro zone gained 0.4 percent in June from a month earlier, economists projected. Eurostat’s measure of production dropped 1.1 percent in May, its biggest drop since September 2012.
In the U.K., Bank of England Governor Mark Carney will present the central bank’s quarterly Inflation Report including new economic forecasts from 10:30 a.m. in London.
U.S. Commerce Department data at 8:30 a.m. in Washington will show retail sales in the world’s largest economy rose in July for a sixth consecutive month, economists surveyed by Bloomberg predicted.

EON, Merck

EON gained 4.7 percent to 13.78 euros. The utility reported first-half underlying net income of 1.53 billion euros ($2 billion), more than the 1.46 billion-euro average analyst projection compiled by Bloomberg. The company also confirmed its annual profit forecast from May.
Salzgitter rose 1.9 percent to 27.22 euros. Second-quarter pre-tax profit of 4.5 million euros beat the 5.38 million-euro loss that analysts had projected.
Gagfah added 1.6 percent to 13.82 euros. Funds from operations excluding asset sales, a measure of a real estate company’s ability to generate cash, will reach as much as 88 euro cents a share in 2014, the company said in a statement. It forecast FFO of as much as 86 cents in May.
Swiss Life advanced 4.3 percent to 220.10 Swiss francs. The life insurer said net income rose to 484 million francs ($532 million) in the first half from 472 million francs in the year-earlier period. That beat the 456 million-franc average estimate of analysts surveyed by Bloomberg. Swiss Life also said it will pay 210 million euros for Corpus Sireo.

Nobel Biocare

Nobel Biocare Holding AG (NOBN) rose 2.5 percent to 16.55 francs. Credit Suisse Group AG raised its rating on the Swiss maker of dental implants that’s exploring a sale to outperform, similar to a buy recommendation, from neutral. The brokerage said the company has received possible takeover bids. EQT Partners AB and Danaher Corp. have shown interest in buying the business, people with knowledge of the matter said earlier this week.
Merck KGaA rose 1 percent to 63.01 euros after the drugmaker’s acquisition of AZ Electronic Materials SA helped second-quarter earnings beat estimates. Earnings before interest, taxes, depreciation and amortization excluding one-off items climbed to 845.7 million euros from 826.4 million euros a year earlier, according to a statement. Analysts had predicted 837 million euros on average.