European stocks climbed, rebounding from their lowest level in three months, as Portugal bailed out Banco Espirito Santo SA, easing concern about the region’s most indebted lenders.
Banco Comercial Portugues SA rallied 6.7%. HSBC Holdings Plc gained 1.5% after reporting lower provisions for bad debt in the first half. Immofinanz AG slid 3% after the Austrian property developer reported annual profit that missed projections and said a delay in the construction of a Moscow shopping center hurt rental income.
The Stoxx Europe 600 Index advanced 0.1% to 332.39 at 2:35 p.m. in London. The benchmark fell for a second consecutive month in July, posting its first back-to-back losses in more than two years. The gauge dropped 2.9% last week to close at its lowest level since April 16.
“The Portuguese bank package will help European sentiment,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit in Hellerup, Denmark. “It’s a healthy sign that Europe is maybe getting its act together in terms of bank closures and restructuring, without making taxpayers bear the burden. The path of least resistance still remains for equities to go higher, and any correction has been more technical than fundamental so far.”
Bank Rescue
Global equities lost about $1.2 trillion in value last week amid concern that Argentina’s default and the crisis at Banco Espirito Santo would constrict credit markets. Portugal’s central bank has taken control of Espirito Santo in a €4.9 billion ($6.6 billion) bailout that will move most of the lender’s assets to a new company called Novo Banco, according to a statement yesterday. The lender’s shares plunged 73% last week before they were suspended on Aug. 1.
National benchmark indexes rose in 13 of the 17 western-European markets that opened today. Iceland’s markets were closed for a holiday. The U.K.’s FTSE 100 Index gained 0.5%, France’s CAC 40 rose 0.8% and Germany’s DAX increased 0.1%.
A gauge of banking stocks rebounded after dropping 3.2% in the final two days of last week. Banco Comercial Portugues jumped 6.7% to €10.8 cents, following its worst week in more than two years, after the Bank of Portugal transfered Espirito Santo’s deposit-taking operations and most of its assets into a new company, which it then bailed out.
UniCredit SpA, Italy’s biggest bank, increased 1.5% to €5.96, while Intesa Sanpaolo SpA gained 1.7% to 2.30 euros. Spain’s Bankinter SA rose 3.2% to €6.49.
HSBC, Metso
HSBC, which accounts for 16% of the Stoxx 600 Banks Index, advanced 1.5% to 638.5 pence. Europe’s largest lender said bad loan charges and other provisions fell to $1.8 billion in the six months ending June 30 from $3.1 billion in the year-earlier period. HSBC also said interest rates increases in the U.K. and the U.S. will boost its revenue.
Metso Oyj gained 3.3% to €30.98. Citigroup Inc. upgraded the Finnish maker of mining equipment to neutral from sell, saying cost-cutting measures will help increase profitability, while orders at Metso’s mining unit may improve.
Balfour Beatty Plc added 2% to 244.6 pence following a report that WS Atkins Plc and WSP Global Inc. are bidding for the company’s U.S. consulting business. Two private-equity firms are also competing to buy Parsons Brinckerhoff, the Sunday Telegraph reported without saying where it got the information. Balfour Beatty’s merger talks with Carillion Plc collapsed last week after the construction company refused to abandon its planned sale of the New York-based business. WS Atkins lost 0.8% to 1,285 pence.
Immofinanz Declines
Immofinanz slipped 3% to 2.24 euros. Net income attributable to shareholders climbed to €178.1 million from 111.1 million euros the previous year, according to figures posted on the developer’s website. Analysts had predicted an increase to €188.7 million for the year ending April 30. Rental income slipped 7.2% to €506.7 million in the 12-month period.
Hugo Boss AG dropped 0.9% to €104.95. Permira Advisers LLP, which owns about 50% of the German maker of luxury suits through its Red & Black Holding GmbH vehicle, is in talks with advisers about a sale of its remaining stake, according to three people with knowledge of the matter.
A report showed a worse-than-expected deterioration in euro-area investor confidence in August. The Sentix research institute’s sentiment index fell to 2.7 from 10.1 in July. Economists surveyed by Bloomberg News had predicted a reading of 9.0 before the release.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.