London Stock Exchange
European stocks rose for a second day amid continuing speculation the Federal Reserve will take action to bolster the economy and as Chinese manufacturing data exceeded forecasts.
UBS AG (UBSN), Switzerland’s biggest bank, advanced 2.1 percent after saying it plans to cut 3,500 jobs to trim costs. Charter International Plc soared 20 percent as the welding and automation-equipment maker said it’s in takeover talks with a potential rival bidder to Melrose Plc. National Bank of Greece SA (ETE) sank to a 14-year low as the nation’s bonds fell, according to Reuters report. .
The benchmark Stoxx Europe 600 Index added 0.8 percent to 226.63 in London, after earlier surging as much as 2.2 percent. The gauge has still fallen 22 percent from this year’s peak on Feb. 17 as European and U.S. economic data that trailed forecasts added to concern the global recovery is at risk. The retreat has left the Stoxx 600 trading at about 9.4 times its companies’ estimated earnings, near the lowest since March 2009, Bloomberg data show.
“Chinese PMI is today’s good news as it shows the world is not falling apart as everybody seemed to believe,” said Morten Kongshaug, a chief equity analyst at Danske Bank A/S in Copenhagen. “European PMI is also a positive as the economy is not contracting.”
Chinese manufacturing may contract at a slower pace in August as the world’s second-biggest economy weathers slumping global confidence, according to a preliminary purchasing- managers index compiled by HSBC Holdings Plc and Markit Economics. The reading of 49.8 for August compared with 49.3 last month. A result below 50 indicates a contraction.
A composite index based on a survey of euro-area purchasing managers in both services and manufacturing remained at 51.1 in August, Markit said. Economists had forecast a drop to 50, the median of 15 estimates in a Bloomberg News survey showed.
The Fed is holding its annual symposium in Jackson Hole, Wyoming, this weekend. This time last year Chairman Ben S. Bernanke hinted that the central bank might embark on a second round of asset purchases, kicking off a 28 percent rally in the Standard & Poor’s 500 Index that ended in a three-year high on April 29.
“Much of the gains being seen here seem to be coming off the expectation that the Fed will serve up further stimulus measures, possibly as soon as the end of this week,” said Cameron Peacock, a market analyst at IG Markets in Melbourne. “Clearly with this being priced in, failure to deliver here will see traders heading for the exits once again.