European Stocks Advance as Retail Gains Outweigh Energy Declines

By Alan Soughley and Inyoung Hwang

European stocks advanced for a second day, as gains in retailers outweighed declines in oil and gas companies, while investors considered the implications of lower oil prices and probable new stimulus measures from the European Central Bank.
The Stoxx Europe 600 Index added 0.8 percent to 342.41 at 9:56 a.m. in London. Stocks rose yesterday, with Greek equities posting the biggest gain of 18 western-European markets after hitting an oversold level.
“You have to play Europe for monetary expectations and the effect of the falling price of oil on European growth,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “Lower oil prices should help boost growth worldwide in 2015 and 2016, but they will also have a huge impact on deflation. So you have to be aware that volatility is going to impact 2015.”
The broad European benchmark gauge fell 1 percent last week for a second weekly drop, posting its worst start to a year since 2008. It fell 3.7 percent from an almost seven-year high reached Dec. 5 through Jan. 9 amid a plunge in oil prices and Greek equities before the nation
holds an election on Jan. 25.
Futures on the Standard & Poor’s 500 Index rose 0.5 percent today, after the underlying index slid 0.8 percent yesterday.
William Morrison Supermarkets Plc and Metro AG pushed an index of retailers to the biggest gain out of 19 groups in the Stoxx 600.

Morrison Gains

Morrison advanced 5 percent after saying it will start a search for a new chief executive officer to replace Dalton Philips, who will step down at the end of the year. It also reported sales at stores open at least a year fell 3.1 percent, excluding fuel, in the six weeks ended Jan. 4. That beat the median estimate of analysts for a 4 percent drop.
Metro added 3.9 percent. The operator of Germany’s Kaufhof department stores reported an increase in first-quarter adjusted revenue as all divisions had better same-store sales in December.
Tesco Plc also rose, advancing 3.6 percent. J Sainsbury Plc and Ocado Group Plc increased more than 3 percent.
Sika AG climbed 3.8 percent after the Swiss adhesives maker reported higher full-year sales on growth in emerging markets. Revenue rose 8.3 percent to 5.57 billion Swiss francs ($5.5 billion) in 2014. That compares with the 5.54-billion franc average of analysts’ estimates.
Royal Dutch Shell Plc and Total SA led a gauge of energy stocks lower, for the worst industry-group performance on the Stoxx 600. Oil extended losses to trade below $45 a barrel amid speculation that U.S. crude stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than 5 1/2 years.
Royal Philips NV slid 1.8 percent after the world’s largest lighting manufacturer said production delays at a facility in Cleveland will hurt earnings more than previously forecast.
Geberit AG declined 0.9 percent after saying fourth-quarter sales growth adjusted for currency effects was 2.9 percent. That missed analyst projections of 4.2 percent and shows a slowdown throughout the year, according to Berenberg Bank.