By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stocks jumped on Thursday,
taking their cues from Wall Street, which extended gains into a
third day following upbeat economic data.
The Stoxx Europe 600 index rose 1% to 287.44, following a rise
of 1.7% on Wednesday.
Shares of Alcatel-Lucent rose over 5%. In a note on Thursday,
Morgan Stanley reiterated its overweight recommendation on the
stock, saying the company's recent issuance of a EUR630 million
($820 million) convertible bond is positive for equity holders.
Shares of Subsea 7 SA tumbled 14% after the Norwegian oilfield
services group lowered its full-year earnings guidance due to
project-cost overruns in Brazil.
The most dramatic action was seen in Greece, where the ASE
Composite index tumbled 3.4% to 808.27, led by a 29% slump for
National Bank of Greece SA (NBG). Markets fell after a report in
the Financial Times suggested the country's bailout program was
running out of cash due to a finance gap.
European finance ministers reached an agreement early Thursday
on rules for winding down insolvent banks, inking a deal in which
banks' shareholders, creditors and big depositors would take the
first hit in the event of a bank crisis. The deal still needs
legislative approval from the European Parliament.
A slew of U.S. data underpinned gains for most of Europe's
markets. Weekly jobless claims fell and personal spending and
incomes rose in May, which helped Wall Street extend gains into a
third day.
"I think investors are now gearing portfolios for the U.S.
economic recovery, picking growth-focused assets which include
large-cap European stocks exposed heavily to the U.S. recovery --
construction, housing stocks/industrials and auto makers," said
Ishaq Siddiqi, market strategist at ETX Capital, in emailed
comments.
German unemployment numbers for June dropped unexpectedly, while
euro-zone confidence numbers rose to the highest in a year. (Read
more about the data
http://www.marketwatch.com/story/euro-zone-confidence-rises-to-highest-in-year-2013-06-27.)
Upbeat day for London, chemicals take a broker hit
In London, the FTSE 100 index jumped 0.9% to 6,222.46, as
resource stocks pushed higher. Shares of Royal Dutch Shell PLC
(RDSA) added to earlier gains, up 1.8%, while miner BHP Billiton
PLC rose 1%.
"Miners had a horrid day yesterday on the drop in gold prices,
but the stabilization in commodity prices today has prompted a
rebound," said Siddiqi.
Shares of WPP PLC jumped over 3% after Bank of America/Merrill
Lynch added the advertising group to its most preferred list,
citing an "attractive combination of value and growth."
Smiths Group PLC rose 2.8% after an upgrade to buy from neutral
at UBS, which said the shares are not reflecting upside from a
potential sale of its medical division.
Also lower were a handful of chemical companies. J.P. Morgan
Cazenove made several cuts to the sector, saying "after three years
of tailwinds, the good times may be over," and potential headwinds
lie ahead. BASF SE , Lanxess AG and Solvay SA were cut to
underweight from neutral. Those shares were off 2.7%, 4%, and 2.8%
respectively.
The German DAX 30 index shook off a flat start to gain 0.6% to
7,987.02. Leading gains, shares of sports-gear maker Adidas AG rose
3% after a Barclays upgrade to overweight from equal weight.
Barclays said Adidas continues to look attractive relative to
peers, brushing off worries over emerging-markets exposure.
The French CAC 40 index rose nearly 1% to 3,761.54, with shares
of heavyweight oil group (TOT) gaining 1.3% on the heels of higher
oil prices.
Drugmaker Sanofi SA (SNY) climbed nearly 2%, also lifting the
index.
In Spain, shares of Bankia SA jumped 2.7% after it sold its
stake in International Consolidated Airlines Group SA for 675
million euros ($879 million). Shares of IAG fell 1.5% in
London.
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