European Energy, Mining Stocks Rise, Led by BP; Peugeot Fallsadmin
European energy and mining stocks, the region’s worst performers in the past three months, rose as a cut in oil output and a nuclear detonation in North Korea lifted commodity prices. BP Plc and Rio Tinto Group paced the advance.
“With oil ticking up and metal prices higher, there might be a new window in the commodity sector that we are ready to exploit,” said Sergio Bareggi, who helps manage $11 billion at Capitalgest SpA in Brescia, Italy. “It’s an opportunity to reconsider the stocks.”
PSA Peugeot Citroen led carmakers’ lower, limiting gains, as General Motors Corp. shares slumped in the U.S. after Kirk Kerkorian said he won’t raise a stake in the company.
The Dow Jones Stoxx 600 Index added 0.1 percent to 345.84 as of 12:57 p.m. in London, after dropping as much as 0.3 percent. The Stoxx 50 gained 0.2 percent, and the Euro Stoxx 50, a measure for the 12 nations sharing the euro, slid 0.1 percent.
Indexes fell earlier after North Korea said it detonated a nuclear bomb for the first time, prompting investors to sell equities and buy assets deemed safer, such as gold. The Stoxx 600 is at its highest since June 2001, helped by takeover speculation and expectations of sustained profit growth.
In Asia, the Morgan Stanley Capital International Asia- Pacific excluding Japan Index slid 1 percent, and South Korea’s Kospi index slumped 2.4 percent, it biggest drop since June 13. Japanese markets were closed for a holiday.
Gold futures for December delivery gained as much as 1.3 percent to $584.40 an ounce on the Comex division of the New York Mercantile Exchange.
North Korea’s announcement is a “sign of desperation,” said Templeton Asset Management Ltd.’s Mark Mobius, who manages $30 billion in emerging-market equities. He said investors should not flee South Korean stocks because they are “cheap.”
National benchmarks rose in all of the 18 western European markets except Germany, Portugal and Spain. France’s CAC gained 0.1 percent, while Germany’s DAX lost 0.1 percent. The U.K.’s FTSE 100 rose 0.7 percent, lifted by gains in commodity stocks.
BP, the world’s third-largest oil producer by market value, added 1.1 percent to 579 pence. Statoil ASA, Norway’s biggest oil and gas company, gained 1 percent to 152.5 pence.
Crude rose in New York after Saudi Arabia and five other OPEC members agreed to cut output by about 3.4 percent to stem a two-month slide in prices. Oil for November delivery climbed 1.2 percent to $60.50 a barrel in after-hours electronic trading.
Rio Tinto, the world’s third-largest mining company, added 1.5 percent to 2,501 pence following gold and copper prices higher. BHP Billiton, the biggest, advanced 1.1 percent to 915 pence. Copper futures rose 2.2 percent in Shanghai.
In the past three months, a measure for oil stocks is the only one among 18 industries in the Stoxx 600 to have fallen. The energy index is down 4.5 percent. The second-worst performing group is mining shares, having gained 1.6 percent. The broader index is up 7.6 percent in the period.
Peugeot, Europe’s second-largest carmaker, fell 1.7 percent to 42.42 euros. DaimlerChrysler AG, maker of the Mercedes-Benz and Jeep vehicles, declined 1.2 percent to 39.36 euros.
GM shares slumped 6.3 percent on Oct. 6 after Kerkorian said his aide Jerome York resigned from GM’s board and announced he wouldn’t buy additional shares in the world’s largest automaker.
“With all the recent news going around, this is a very delicate sector at the moment, and clearly not one of my favorite ones,” said Bareggi of Capitalgest. “Kerkorian is sending a negative sign on the industry, so we are going to stay on the sidelines.”
Peugeot’s shares, which have climbed 9.9 percent in the past two months, were separately cut to “equal-weight” from “overweight” by analysts at Morgan Stanley. “The stabilization and recovery of Peugeot’s Western European” sales “is simply not occurring,” they wrote in a note to investors today.
Shire Plc, the U.K.’s third-largest drugmaker, jumped 6.3 percent to 932 pence. The U.S. Food and Drug Administration sent Shire partner New River Pharmaceuticals Inc. a so-called approvable letter on its attention-deficit treatment NRP-104, which the company prepares to begin selling early next year.
U.S. regulators requested more information before approval, Basingstoke, England-based Shire said in a statement.
BT Group Plc, the U.K.’s largest telephone company, lost 1.2 percent to 263.25 pence. The shares were cut to “sell” from “hold” at ING Groep NV. Goldman, Sachs & Co. separately added the stock to its “conviction sell list” of least favorite stocks in Europe.
Corus Group Plc, which jumped 24 percent last week after Tata Steel Ltd. of India said it may bid for the U.K. steelmaker, rose 2.1 percent to 491.25 pence. A bidding war is likely to emerge, with analysts believing Russia’s OAO Severstal will seek to buy Corus, the London-based Times newspaper reported Oct. 7, citing analysts.
TeliaSonera AB, the largest Nordic phone company, rose 3.1 percent to 49.6 kronor. Cevian Capital AB has bought 70 million shares in TeliaSonera, Swedish television channel TV4 reported, without saying where it got the information.
Cevian Capital was not immediately available for comment.
“TeliaSonera has large cash holdings, and Gardell has support in the market for an extraordinary dividend,” said Joergen Vrenning, a Stockholm-based fund manager at Catella Capital, which oversees the equivalent of about $3 billion.
AWG Plc, whose Anglian Water unit supplies 6 million customers in eastern England, dropped 0.6 percent to 1,598 pence. 3i Group Plc, Canadian and Australian investors raised their offer for AWG by 1.8 percent to 2.25 billion pounds ($4.2 billion) to thwart possible competing bids. The offer of 1,578 pence a share is still below the current market price.
European Aeronautic Defence & Space Co., parent of planemaker Airbus SAS, fell 1.2 percent to 20.18 euros. Christian Streiff, chief executive officer at the world’s largest planemaker, and EADS have lost “mutual trust,” the Frankfurter Allgemeine Zeitung reported.
Streiff only joined Airbus in July following the resignation of his predecessor because of growing delays and cost overruns on the A380 superjumbo. French Prime Minister Dominique de Villepin today said Streiff should keep his job.