Old Mutual Plc rallied 9.4 percent after saying it will sell its Nordic business for 2.1 billion pounds ($3.3 billion). TUI AG, the owner of Europe’s largest travel company, climbed after analysts upgraded the stock. Telefonica SA dropped after cutting its dividend forecast for the first time in a decade.
The Stoxx 600 gained 0.7 percent to 233.97 at 9:08 a.m. in London following a report that the European Central Bank is pushing for a change in bank capital rules to prevent a credit crunch. The March futures contract on the Standard & Poor’s 500 Index added 0.3 percent today, while the MSCI Asia-Pacific Index retreated 1.7 percent.
“The main risks to our outlook stem from Europe and potential secondary consequences for global growth,” Robert Buckland, the chief global strategist at Citigroup Inc. in London, wrote in a report today. “Cheap valuations should provide a buffer against further bad macro news.”
The Stoxx 600 fell to its lowest level since Nov. 29 yesterday as the U.S. Federal Reserve refrained from taking new action to bolster the world’s largest economy. The gauge has retreated 15 percent this year and trades at 10.2 times estimated profits, a discount of 15 percent to its average price-earnings ratio of 12 over the past five years, according to data compiled by Bloomberg.
Spanish Bond Sale
Spain aims to sell as much as 3.5 billion euros ($4.5 billion) of bonds maturing in 2016, 2020 and 2021 today. A report showed Germany’s manufacturing industry contracted for a third straight month.
In France, the Purchasing & Services Managers’ Index rose to 48.7 in December from 47.3 in November. This topped the average economist estimate for a reading of 47, according to Bloomberg data. A reading below 50 indicates a contraction.
The ECB is pushing to change new capital rules for banks to prevent “aggressive deleveraging” and a credit crunch possibly leading to recession, Market News International reported, citing unidentified sources.
The agency reported the ECB is supporting a new proposal which would discourage banks from dumping riskier assets to boost capital levels.
Downside Risks
“The balance of risk has shifted to the downside again,” said Valentijn Van Nieuwenhuijzen, the head of strategy at ING Investment Management in The Hague, which has $163 billion in assets under management. “Overall, our stance is quite defensive. It’s still uncertain what the end game is going to look like” for the euro area, he told Linzie Janis in a Bloomberg Television interview.
Old Mutual Plc rallied 9.4 percent to 121.4 pence. The third-biggest insurer in the U.K. said it will sell its Nordic business, excluding Finland, for 2.1 billion pounds to Skandia Liv.
TUI jumped 6.8 percent to 4.33 euros after Cheuvreux upgraded the shares to “outperform” from “underperform.” Exane BNP Paribas SA and Natixis SA also raised their recommendations on the stock.
Bouygues SA climbed 2 percent to 23.54 euros after Les Echos reported that the company is “very confident” about 2012 as international construction orders are strong and there is no sign of a slowdown in France, citing an interview with Chief Executive Officer Martin Bouygues.
Telefonica fell 0.7 percent to 13.09 euros. Spain’s former telephone monopoly reduced its 2012 dividend forecast by 14 percent, citing market conditions that have changed “significantly.”
“Management credibility has been tarnished and Telefonica remains on an unjustified growth premium,” James Britton, a telecoms analyst at Nomura Holdings Inc., wrote in a report. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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