EU stocks advance amid US budget-talk optimism
European (SXXP) stocks climbed, rebounding from a three-month low, as US President Barack Obama expressed confidence that he will strike a deal with Congress on a new budget. U.S. index futures and Asian shares also rose.
HSBC Holdings Plc (HSBA) added 1.3 percent after Europe's largest lender by market value said it has held talks to sell its stake in Ping An Insurance (Group) Co. BP Plc (BP/) gained 2 percent following a report that the oil company is planning a 3.7 billion-pound ($5.9 million) buyback. ING Groep NV (INGA) advanced 2 percent after the European Commission granted it more time to sell its insurance operations in the region.
following a report that the oil company is planning a 3.7 billion-pound buyback. US President Barack Obama waves to media after his arrival at Don Mueang International airport in Bangkok on November 18, 2012.
The benchmark Stoxx Europe 600 Index gained 0.8 percent to 264.9 at 8:30 a.m. in London, halting a three-day slide. Standard & Poor's 500 Index futures increased 0.3 percent and the MSCI Asia Pacific Index rallied 0.9 percent. "European equity markets are set to open higher on optimism of a U.S. fiscal-cliff resolution," Jonathan Sudaria, a trader at Capital Spreads wrote in e-mailed comments. "Markets had feared a stalemate, but the bitter standoff that they had earlier priced in did not materialize."
The S&P 500 erased its decline after the close of European trading on Nov. 16 after House Speaker John Boehner said he held constructive budget talks with Obama and he would accept increased government revenue coupled with spending cuts.
"I am confident we can get our fiscal situation dealt with," Obama said at a news conference in Bangkok, where he began a three-nation trip.
Before Obama left for Asia, he met with senior Democrats and Republicans for talks to avoid a $607 billion-package of automatic tax increases and spending cuts that if allowed to come into force would push the country into a recession next year. Congress returns from its Thanksgiving holiday on Nov. 26. The Stoxx 600 dropped 2.7 percent last week, its biggest selloff since June, as concern mounted that U.S. lawmakers would fail to avert the socalled fiscal cliff. The gauge has lost 3.6 percent since the re-election of Obama on Nov. 6 set up a budget showdown with the Republican-controlled House of Representatives.
Gains by European equities may be limited as Israel's Defense Minister Ehud Barak said the army was prepared to invade the Gaza Strip for the first time in almost four years. Air strikes and rocket attacks have killed 71 Palestinians and three Israelis. Crude oil advanced for a second day in New York.
Investors awaited a U.S. report that will show sales of previously owned houses in October held near a two-year high, according to the median economist estimate in a Bloomberg survey. The National Association of Realtors publishes its index at 10 a.m. in Washington.
HSBC climbed 1.3 percent to 603.4 pence after the bank said it has held "discussions which may or may not lead to the sale of the shares" in the insurer. HSBC would raise $9.5 billion from its stake in China's second-biggest insurance company based on its value before today's open in Hong Kong.
BP gained 2 percent to 425 pence for the biggest contribution to the Stoxx 600's advance. The Sunday Times reported that the company will use the buyback to lift its share price and repel bids from rivals The newspaper declined to say where it got the information. BP spokesman Mark Salt declined to comment. ING rose 2 percent to 6.64 euros after the commission extended the company's deadline to sell the insurance businesses. ING pledged to repay state support from the Dutch government by 2015 under an amended restructuring plan.