Basic Resource sector leads; EdF added to Goldman conviction buy list
LONDON (MarketWatch) -- European shares jumped on Thursday, with investors pushing up metal stocks in particular after U.S. aluminum giant Alcoa kicked off third-quarter earnings season with a strong set of results.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP 242.73, +2.43, +1.01%) climbed 1.2% to 243.23 in a broad-based move. The gains take the index's quarterly rise to 0.3%, the first time it's been in positive territory in the fourth quarter.
The gains came after Alcoa (AA 15.12, +0.92, +6.48%) , aided by stronger aluminum prices, improved demand and aggressive cost cuts, reported a surprise third-quarter profit late Wednesday, ending three straight quarters of losses. See full story.
Basic resource stocks led the advance in Europe with a 3% gain, as shares of Anglo American (UK:AAL 2,163, +64.00, +3.05%) rose 3.3%, Randgold Resources (UK:RRS 4,702, +143.00, +3.14%) shares climbed 2.3% and steel giant ArcelorMittal (NL:MT 25.82, +1.11, +4.47%) (MT 38.05, +1.68, +4.62%) rose 3.8%.
Vedanta Resources (UK:VED 2,174, +67.00, +3.18%) shares jumped 5.4% after it detailed in-line production figures.
Support for the mining sector also came from commodity markets where gold futures touched another record high in electronic trading, of $1,059.60 an ounce, as the dollar weakened against most major currencies including euro and sterling. See full story.
Investors across asset markets are waiting for interest rate decisions from the European Central Bank and the Bank of England on Thursday, with both expected to leave rates on hold at ultra-low levels. Read ECB, BoE preview.
On a regional level, the U.K. FTSE 100 index (UK:UKX 5,140, +31.43, +0.62%) rose 1% to 5,157.95, the German DAX index (DX:DAX 5,706, +65.43, +1.16%) climbed 1.3% to 5,713.39 and the French CAC-40 index (FR:PX1 3,800, +43.86, +1.17%) jumped 1.4% to 3,807.60.
Asian stocks were mostly higher, with Australian shares sharply higher after a better than expected jobs report. See Asia Markets.
U.S. stock futures also climbed, with Dow Jones Industrial Average futures up 86 points.
Of companies updating investors on Thursday, Carphone Warehouse (UK:CPW 205.50, +0.50, +0.24%) saw its shares rise 2.4% after it reiterated its fiscal-year guidance, adding that both its TalkTalk Group and Best Buy Europe units are continuing to trade well and that its demerger is on track for March 2010.
Shares of Irish drinks maker C&C Group (UK:CCR 2.90, -0.09, -3.01%) declined 3% after it said that its first-half attributable profit fell almost 10% to 51.9 million euros after spirits and liqueurs volumes declined by 15% due to continuing de-stocking in major markets.
Anheuser-Busch InBev (BE:ABI 32.08, +0.45, +1.41%) rose 1% after inking a pact to sell its theme park division to Blackstone Group for as much as $2.7 billion. See full story.
Shares of U.K. bookmaker Ladbrokes (UK:LAD 170.20, -11.10, -6.13%) fell 7% after it said it plans to raise around 275 million pounds ($439 million) by selling shares to existing investors and detailed quarterly trading trends.
Net revenue for the three months to Sept. 30 fell 15%, excluding the impact of its biggest individual customers. Group operating profit fell 58% to 22.4 million pounds and gross margin declined, the firm added.
Shares of France's EDF (FR:EDF 39.64, +1.12, +2.91%) surged 5.3% after Goldman Sachs added to the company to its conviction buy list.
The investment bank said EDF shares are not discounting improvement in French power tariffs and control of costs among other factors.
