European Stocks Rise on U.S. Economy; Nokia, Rio Tinto Advance

Sept. 26 (Bloomberg) — European stocks rose for the first time in three days on speculation the U.S. economy, the world’s biggest, will avoid a slump.

Nokia Oyj and Rio Tinto Group led a rally by technology companies and commodity producers, which can be affected by fluctuations in global economic growth.

“The market has been very concerned about a slowdown in spending by the U.S. consumer,” said Peter Jarvis, the London- based director of European equities at F&C Asset Management, which oversees about $230 billion. “The U.S. economy is still fairly robust and we’re not seeing the rapid slowdown that people had feared.”

Iberdrola SA and Scottish Power Plc rose after Acciona SA said it bought a stake in Spanish power company Endesa SA for $4.3 billion, raising expectations of more mergers and acquisitions in the power industry. Hanson Plc advanced on speculation it may receive a takeover bid.

The Dow Jones Stoxx 600 Index added 0.8 percent to 337.49 as of 10:58 a.m. in London. The Stoxx 50 rose 0.7 percent and Euro Stoxx 50, a measure for the 12 nations sharing the euro, climbed 0.8 percent.

The U.S. Standard & Poor’s 500 Index rose to a five-year high yesterday after Federal Reserve Bank of Dallas President Richard Fisher said the economy “is healthy and robust.” A report later today may show confidence among U.S. consumers probably rebounded in September from a nine-month low.

`Slow Significantly’

Concern that higher borrowing costs and a slowdown in the U.S. housing market will damp profit growth has pushed the Stoxx 600 down 2.6 percent from this year’s high reached on May 9. The European Central Bank has boosted lending rates four times since December. The U.S. Federal Reserve kept rates unchanged for a second time last week after 17 consecutive increases.

“Fisher’s comments certainly provided a fillip to U.S. markets,” said Lee Humphreys, the head of European sales trading at E*Trade Securities Ltd. in London. “Investors have been concerned that economic growth may start to slow significantly.”

National benchmarks rose in 16 of the 17 western European markets that were open. France’s CAC 40 added 1 percent and Germany’s DAX rose 0.7 percent. The U.K.’s FTSE 100 Index increased 0.8 percent.

Stocks maintained gains after a report showed German business confidence fell for a third month in September. The Ifo research institute in Munich said today its sentiment indicator based on a survey of 7,000 executives slipped to 104.9 from 105 in August. Economists expected a decline to 104.4.

Nokia, Rio Tinto

Nokia, the world’s largest maker of mobile handsets, rose 0.9 pent to 15.31 euros in Finland. STMicroelectronics NV, Europe’s No. 1 chipmaker, added 1.8 percent to 13.22 euros.

Rio Tinto, the world’s third largest mining company, climbed 2.9 percent to 2,421 pence. BHP Billiton, the biggest mining company, gained 2.7 percent to 876 pence. Copper in Shanghai rose as makers of cables and wire bought to replenish stockpiles before the weeklong National Day holiday.

Endesa, the Spanish power company that’s the target of two hostile takeover bids, was suspended from trading after Acciona, Spain’s fourth-largest building company, bought a 10 percent stake for 3.4 billion euros ($4.3 billion). Acciona said it has financing to double the stake, threatening E.ON AG’s 26.9 billion-euro bid for the nation’s largest power company.

Acciona’s purchase may force E.ON to raise its bid for Endesa, investors such as Jacobo Blanquer, of Nordkapp Inversiones SV said. Iberdrola SA, Spain’s second-biggest power company, climbed 3.1 percent to 33.42 euros. Scottish Power, the U.K.’s fifth-largest energy provider, advanced 1.6 percent to 625.5 pence.

`Counter Bid’

“Investors expect a counter bid,” said Simone Freschi, an equity and derivatives trader at Banca Monte dei Paschi di Siena SpA. “We’re seeing tentative mergers and acquisitions among European utilities.”

Hanson, the world’s largest supplier of sand and gravel for building, advanced 6.3 percent to 731 pence on speculation it may receive a takeover bid. A spokesperson for Hanson was not immediately available to confirm or deny the speculation.

“Hanson is an attractive company because of its cash- generating business,” said John Sheehan, an analyst at NCB Stockbrokers Ltd. in Dublin. “Clearly the speculation of a bid is around.” He has a “hold” recommendation on the stock.

Shares of Carnival Plc rose 1.5 percent to 2,470 pence after the cruise operator was rated “buy” in new coverage at UBS AG, which said the company “represents a rare opportunity within the leisure sector.”

BT Group Plc fell 0.6 percent to 256.5 pence after ABN Amro Holding NV lowered its recommendation on Britain’s largest phone company to “sell’ from “hold,” citing increased competition.

Mitchells, Ryanair

Mitchells & Butlers Plc, which runs about 2,200 U.K. pubs in chains including O’Neill’s, added 1.1 percent to 578 pence after the company said fiscal second-half sales increased as more Britons went out to its properties to eat.

Ryanair Holdings Plc fell 2 percent to 8.28 euros. Europe’s biggest low-cost airline said it has hedged its fuel needs from January to March at a price equivalent to $73 per barrel of oil. Oil recently traded at $61 a barrel in New York.

Orkla ASA added 1.3 percent to 307 Norwegian kroner. Norway’s biggest consumer-goods maker is in talks to take over Hafslund ASA’s stake in Renewable Energy Corp ASA, a Norwegian maker of solar-energy products, Verdens Gang newspaper reported, without saying where it got the information. Shares of Renewable Energy surged 2 percent to 90.75 kroner. Officials at Hafslund and Orkla declined to comment, the newspaper said.

Tullow Oil

Shares of Tullow Oil Plc slid 1.5 percent to 345.25 pence. Hardman Resources Ltd., which yesterday agreed to a A$1.47 billion ($1.1 billion) offer from Tullow Oil may attract a higher bid from a Chinese or Indian state-owned oil company, said ABN Amro Holding NV.

Scania AB, Sweden’s second-largest truckmaker, fell 5.9 percent to 430 Swedish kronor after Volkswagen AG, Scania’s largest shareholder, said MAN AG should abandon a hostile takeover bid in favor of private talks.

Metrovacesa SA gained 4.7 percent to 105.95 euros. Spain’s biggest real-estate company will rejoin the country’s benchmark stock index next month, the Spanish stock exchange said.

Source- http://www.bloomberg.com

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