European Stocks Rebound as Natixis, M&S Gain on Earnings

By Sofia Horta e Costa  

European stocks rose for the first time in three days as companies from Marks & Spencer Group Plc to Natixis (KN) SA rallied after posting better-than-estimated earnings. U.S. index futures advanced after Republicans gained majority in the Senate.
The Stoxx Europe 600 Index climbed 1 percent to 334.31 at 10:30 a.m. in London as all the industry groups on the gauge climbed. The benchmark measure lost 1.8 percent in the past two days as some earnings missed projections and the European Commission cut growth forecasts for the region.
“Signs of corporate health worldwide seem to be giving some confidence to the market,”said Michael Kapler, a portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. “Although profit expectations have come down quite a bit in
Europe, at least we are seeing the first signs of improvement now. We still need more economic growth to sustain valuations.”
Profit for Stoxx 600 companies may increase 7.2 percent this year, analysts predict. That’s down from 8.3 percent growth forecast just a month ago. The gauge trades at 15.1 times its members’ projected earnings, 20 percent above its five-year average valuation, data compiled by Bloomberg show.
Standard & Poor’s 500 Index futures advanced 0.4 percent today as Republicans made gains in midterm elections, wresting control of the Senate from Democrats, winning crucial governor races and cementing their majority in the House.

U.S. Jobs

A private report based on October payrolls may show American companies hired the highest number of workers since June, economists surveyed by Bloomberg project. The ADP Research Institute’s data precedes the Labor Department’s employment report on Nov. 7.
Investors also await tomorrow’s policy decisions by the European Central Bank. They will analyze ECB President Mario Draghi’s speech for hints of further stimulus, including the purchase of government bonds. The ECB began buying covered bonds last month as part of a strategy to revive prices, boost lending and spur growth.
M&S climbed 8.1 percent to 437.4 pence, its biggest rally since March 2013. The retailer said first-half profit rose to 268 million pounds ($428 million), exceeding the average analyst estimate of 253 million pounds. The company’s general merchandise unit will be more profitable this year than previously forecast, M&S said.
Natixis advanced 2.6 percent to 5.44 euros after higher revenue from asset management and insurance helped third-quarter net income rise 10 percent to 281 million euros ($352 million). That beat analysts’ prediction of 275 million euros.

Hannover, ING

Hannover Re rose 1.5 percent to 67.50 euros. The reinsurer said third-quarter profit rose to 251 million euros, beating the 209 million-euro average analyst estimate. The company also confirmed its full-year profit target and said net income will climb next year.
ING Groep NV added 2.1 percent to 11.46 euros after the largest Dutch lender said it will make the final repayment of state aid on Friday, ending a six-year bailout. ING also posted third-quarter profit that missed analysts’ estimates.
Banca Monte dei Paschi di Siena SpA added 4.1 percent to 67.7 euro cents as people familiar with the matter said the Italian lender is close to securing underwriters for a share sale to raise as much as 2.5 billion euros.
Lafarge SA gained 1.1 percent to 53.26 euros after saying it will slow asset sales in the fourth quarter. The cement maker also said growth in emerging markets helped profit meet projections in the third quarter.
Endesa SA fell 3.3 percent to 14.50 euros. Shareholder Enel SpA said it will sell a 17 percent stake in the Spanish utility. The offering could be increased to 22 percent, Enel said.