European stocks climbed as Russia and Ukraine agreed on the steps needed for a truce, and a worse– than-forecast euro-zone purchasing managers’ index stoked speculation that the area’s central bank will increase stimulus. U.S. stock-index futures and Asian shares also rose.
Danone increased 2.2 per cent after appointing Emmanuel Faber as chief executive officer as it split the chairman’s dual roles. Ashtead Group Plc advanced 2.3 per cent after saying full– year results will be higher than previously forecast. Hermes International SCA fell 6.5 per cent after LVMH Moet Hennessy Louis Vuitton SA said it will distribute its stake in the company to its own shareholders.
The Stoxx Europe 600 Index added 0.9 per cent to 345.96 at 10:18 a.m. in London, its highest level since July 7. The gauge has rebounded 6.5 per cent from a four-month low on Aug. 8 as European Central Bank President Mario Draghi signaled policy makers are ready to increase stimulus to fight low inflation. Standard & Poor’s 500 Index contracts increased 0.4 per cent today and the MSCI Asia Pacific Index gained 0.8 per cent.
“It is the hoped-for stimulus at the ECB that is the main driver, with some additional help from a slight calming down on the geopolitical front,” Raimund Saxinger, who oversees $22-billion as a fund manager at Frankfurt-Trust Investment GmbH, said in a phone interview. “I think markets are aware that this can be reversed at any time, but that is what is contributing. The PMI probably increases the likelihood of stimulus as well.”
Russian President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko largely agreed on steps to a cease fire, Putin’s spokesman said, denying Ukraine’s assertion that the leaders reached agreement on a permanent truce.
A composite purchasing managers’ index for the euro area from Markit Economics fell to 52.5 in August from 53.8 in July, missing analyst forecasts of 52.8.
Central-bank stimulus has helped the Stoxx 600 rally about 61 per cent from its low in September 2011. Since taking over in November of that year, Draghi has pledged to hold borrowing costs low and said in July 2012 he would do “whatever it takes” to save the euro.
In June of this year, the ECB took its deposit rate negative for the first time and cut its benchmark rate to a record low of 0.15 per cent. The ECB meets to discuss monetary policy on Sept. 4.
In the U.S., a report at 10 a.m. in Washington may show factory orders rose 11 per cent in July, compared with a 1.1 per cent gain in June, according to the median estimate of economists surveyed by Bloomberg News. The Federal Reserve releases its Beige Book review of regional economic conditions at 2 p.m.
Danone added 2.2 per cent to 54.93 euros. The world’s biggest yogurt maker appointed Faber as CEO, while Franck Riboud remains chairman. The separation of the positions will help pave the way for “a smooth succession,” Paris-based Danone said late yesterday.
Ashtead rose 2.3 per cent to 1,009 pence. The rental equipment company reported a 22 per cent increase in first– quarter underlying rental revenue and said earnings before interest, taxes, depreciation and amortization jumped 30 per cent to 209.9 million pounds ($345.7-million).
ING Groep NV climbed 1.9 per cent to 10.75 euros. The biggest Dutch financial-services company said it will reduce its stake in a former U.S. insurance unit, Voya Financial Inc., by selling $1.18-billion in shares.
LVMH added 3 per cent to 137 euros. Hermes dropped 6.5 per cent to 245.75 euros, paring earlier losses of as much as 11 per cent. The distribution of LVMH’s 23 per cent holding – worth about €5.7-billion ($7.5-billion) – will end a four-year battle over its stake-building in the maker of Birkin bags.