By Barbara Kollmeyer
MADRID (MarketWatch) -- European stock markets were largely
positive in afternoon trading on Tuesday, with investors pleased
with results for oil major BP PLC and all eyes on the U.S. Federal
Reserve.
The Stoxx Europe 600 index rose 0.3% to 267.27.
Some analysts said the gains for Europe were largely earnings
related, while others said markets are looking squarely at the
outcome of the two-day Federal Open Market Committee meeting that
begins on Tuesday. Midterm elections also take place Tuesday.
U.S. stocks opened higher across the board.
"Expectations of what the Fed is going to deliver tomorrow, that
is what everyone is looking at here," said Christian Tegllund
Blaabjerg, chief equity strategist at Saxo Bank, in Denmark. "In
terms of earnings, we are past that point where earnings are going
to drive equities much higher. It's been solid earnings all
over."
A decision from the Fed is due Wednesday, with wide expectations
it will announce another round of quantitative easing.
Gains for Europe were led by London, with oil and mining groups
higher, and several companies reporting results. Heavyweight oil
giant BP (BP) rose 2.6%. The group said third-quarter net profit
fell 67% owing to a further $7.7 billion of pretax charges related
to the oil spill in the Gulf of Mexico. Adjusted underlying profit,
however, topped consensus forecasts.
Analysts at Societe Generale, who rate BP a buy, said the
underlying numbers at BP look "unaffected" by the spill-related
disturbances. "Adjusted for divestments and spill costs, BP's
performance remains strong," said the analysts in a note to
investors.
BG Group PLC also gained 2.6%, after the company reported a
higher third-quarter profit and announced an upgrade to its
Brazilian reserves.
Tullow Oil PLC rose 3.6% and Royal Dutch Shell PLC (RDSA) (RDSB)
added 2.7%, with oil gains helping the U.K. FTSE 100 index advance
1.1% to 5,759.18.
Also in London, shares of Imperial Tobacco Group PLC rose 3%
with the market viewing positively news that the group's 2010
fiscal net income nearly doubled on 6.2% higher revenue.
In the mining sector, Kazakhmys PLC rose 3.1% and Fresnillo PLC
rose 1.1%. Precious-metals prices were higher across the board on
Tuesday, supporting mining shares.
On the downside in London, shares of Lloyds Banking Group PLC
(LYG) fell 3.2% after a third-quarter update. The company said it's
on track for underlying profit targets for 2010, but didn't give
specific figures.
In Germany, the DAX 30 index rose 0.7% to 6,650.48, with gains
led by health-care company Fresenius SE , up 2.7% after reporting a
10% gain in net income for the third quarter and lifting its 2010
expectations for net income.
Retailer Metro AG , came off earlier gains, slipping 1.2%. The
company doubled its net profit for the third quarter, beating
forecasts, and said it expects 2010 sales will exceed the prior
year's levels but fall short of its medium-term targets.
Shares of gases and engineering firm Linde AG fell 1%, even as
the company reported a 50% increase in third-quarter profit,
beating forecasts, and reaffirmed its full-year outlook.
In Paris, the CAC 40 index rose 0.6% to 3,866.38, with shares of
Total SA (TOT) up 1.5%, following oil stocks broadly higher.
Shares of auto-related companies led the downside. PSA Peugeot
Citroen fell 1.8% and Renault SA fell 2.3%.
In an interview with French radio, the head of Renault's sales
in France, Bernard Cambier, reportedly said the domestic auto
market fell 19% in October, after an 8.2% fall in September, Dow
Jones Newswires reported. He added that Renault sees the overall
market to be down 5% against 2009, which is higher than a 10% fall
it was forecasting earlier this year.
In Spain, the IBEX 35 index recovered from earlier losses to
trade up 0.4% to 10,688.90, as shares of heavyweight BBVA SA (BBVA)
pared losses. Those shares fell 1.1% as the company said it would
pay $5.84 billion for a 24.9% stake in Turkiye Garanti Bankasi AS
(GARAN.IS).
Analysts fretted as BBVA also said it would seek to raise 5
billion ($6.98 billion) from existing shareholders.
On the economic front, data showed that the Markit final
euro-zone manufacturing purchasing managers index rose to 54.6 in
October, above the earlier flash estimate of 54.1.
In Asia hours, a couple of central banks took the spotlight. The
Reserve Bank of Australia raised its benchmark rate by 25 basis
points to 4.75%, triggering gains for the Australian dollar and
stocks. The Reserve Bank of India lifted lending and borrowing
rates by a quarter-point, in a move widely expected by
economists.