European Stocks Climb as Merck, Rio Tinto Shares Advance

By Sofia Horta e Costa

European stocks advanced, following their biggest drop in 11 weeks, as investors assessed the health of the euro-area economy after a report showed German business confidence fell for a fifth month. U.S. index futures climbed, while Asian shares were little changed.
Merck KGaA and Rio Tinto Group climbed as brokerages recommended buying the shares. TNT Express NV lost the most in 20 months after dropping its 2015 profitability forecast. Adecco SA slipped 3.5 percent after saying Germany and France experienced weaker growth than normal this month.
The Stoxx Europe 600 Index added 0.2 percent to 342.66 at 11:37 a.m. in London, after earlier dropping as much as 0.4 percent. The equity gauge slid
1.4 percent yesterday, the biggest loss since July 8, as health-care shares fell amid a U.S. government crackdown on tax-saving mergers, and as manufacturing growth slowed in the euro area.
“Even as German confidence data today missed expectations, the level is still high,” said Michael Kapler, a portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. “The ECB is there to support any downturn. I would see a bigger correction as a buying opportunity.”
Standard & Poor’s 500 Index futures rose 0.3 percent, and the MSCI Asia Pacific Index added less than 0.1 percent.
German business confidence declined in September to its lowest level in 17 months. The Ifo institute’s business climate index, based on a survey of 7,000 executives, fell to 104.7 from 106.3 in August. Economists had predicted a drop to 105.8.

U.S. Data

Investors have also been examining U.S. data to gauge the strength of the world’s largest economy amid signs of weaker growth in Europe. A Commerce Department report at 10 a.m. in Washington will probably show new-home sales rebounded in August following two months of declines, economists projected.
Merck climbed 3.4 percent to 75.32 euros. Commerzbank AG raised its rating on the pharmaceutical company to buy from hold, with analyst Daniel Wendorff saying Merck’s acquisition of Sigma-Aldrich Corp. will boost earnings.
Rio Tinto rose 0.9 percent to 3,136 pence, for its largest two-day gain in six weeks. Morgan Stanley upgraded its rating on the stock to overweight, similar to a buy recommendation, from the equivalent of neutral. The mining company will be able to both reinvest and return money to shareholders as cash flow increases, the brokerage said.

TNT Slides

TNT Express slumped 12 percent to 4.95 euros. The parcel company dropped a target to lift operating profit adjusted for some costs as a percentage of sales to 8 percent next year, because of slower economic growth and increased competition, it said in a statement. The forecast had referred to the regions of Europe and the Americas and assumed economic growth of 2 percent to 3 percent in Europe.
PostNL NV, which owns a 15 percent stake in TNT Express, lost 3 percent to 3.43 euros.
Adecco fell 3.5 percent to 64.10 Swiss francs. A seasonal pick-up in September has been weaker than normal as economic data point to a slower rebound in parts of Europe, the Swiss provider of temporary workers said in a statement before the start of its investor day in Rome today. So-called organic underlying revenue increased 5 percent in the first two months of this quarter.
Seadrill Ltd., the world’s biggest offshore-rig company, slipped 1.9 percent to 177.30 kroner. Seadrill Partners LLC, formed by Seadrill to own, operate and acquire offshore drilling rigs under long-term contracts, said it plans to sell 8 million units for general company purposes, including acquisitions and debt repayment.