European, Asian Shares Advance

Thursday June 11, 2009

European and Asian shares climbed and U.S. stock-index futures advanced as the International Energy Agency increased its global oil-demand forecast, adding to signs the worst of the recession may be over.

GlaxoSmithKline Plc, the U.K.’s biggest drugmaker, rose the most in a month after Morgan Stanley advised buying European health-care shares. Electrolux AB, the world’s second-biggest appliance maker, advanced 5.1 percent after Goldman Sachs Group Inc. added the shares to its “conviction buy” list.

Europe’s Dow Jones Stoxx 600 Index increased 0.7 percent to 214.25 at 9:51 a.m. in London. The gauge has surged 36 percent since March 9 on speculation the first global recession since World War II is easing. The measure is valued at 24.9 times the earnings of its companies, the most expensive level since 2004, weekly data compiled by Bloomberg show.

“The worst is over for banks and the world economy,” said Otto Waser, the chief investment officer at R&A Research & Asset Management AG in Zurich. “The recovery more or less is going to be the stock market theme for the next 12 months. We are saying it’s getting a lot less worse,” he said in a television interview.

The MSCI Asia Pacific Index gained 0.5 percent, led by mining and energy companies, as rising fixed-asset investment in China boosted confidence the global economy is recovering.

U.S. Futures

Standard & Poor’s 500 Index futures added 0.3 percent to 943.3. Sales at U.S. retailers probably rose in May for the first time in three months, economists said before a Commerce Department report due at 8:30 a.m. in Washington today. At the same time, the Labor Department may report that 615,000 workers filed claims for jobless benefits last week, compared with 621,000 a week earlier, according to the survey median.

The Fed said yesterday that the U.S. economic slump may be slowing in almost half of its regions, with the outlook at some companies improving while “stringent” loan conditions and a “weak” labor market persist.

“Economic conditions remained weak or deteriorated further” from mid-April through May, while five of 12 Fed districts “noted that the downward trend is showing signs of moderating,” the Fed said in its Beige Book business survey, published two weeks before officials issue their next monetary policy decision.

Bank of England policy maker Andrew Sentance said the U.K. recession may be “bottoming out,” setting the scene for a recovery as soon as this year.

IEA Forecast

The International Energy Agency today raised its global oil-demand forecast for the first time in 10 months. The adviser to 28 nations increased its demand estimate for this year by 120,000 barrels a day to 83.3 million barrels a day in its monthly report. Still, consumption worldwide will contract by 2.9 percent from last year, the biggest drop since 1981.

Glaxo added 2 percent to 1,053 pence. Pharmaceutical shares were raised to “attractive” at Morgan Stanley, which said “valuations capture both near-term U.S. political uncertainty and growing economic pressure.” Glaxo was boosted to “equal weight.”

Electrolux added 5.1 percent to 108.75 kronor after Goldman Sachs raised its recommendation to “buy” from “sell” and added the stock to the firm’s “conviction buy” list.

China Petroleum, known as Sinopec, climbed 2.3 percent to HK$5.85. The company’s Sinopec Shanghai Petrochemical Co. unit said it expects to post a profit for the first half of 2009, compared with a net loss for the same period last year.

Carnival Plc, the world’s largest cruise line operator, slid 1.1 percent to 1,540 pence as oil climbed for a third day.


Courtesy: Bloomberg