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Market Update

European Markets Rebound on Service Growth, BP in Focus

Author: Barry Randall
Last Update: 9:56 AM ET February 05 2013

3:55 PM Frankfurt – European markets rebounded after plunging the most this year. The latest read on the service sector offered improving snapshot across the euro zone but the growth rates diverged between Germany and France. Italian bond yields crossed 4.5%.

European markets rebounded on the earnings from Munich Re, ARM Holdings and BP Plc and the latest data on the service sector.

In London FTSE 100 index increased 0.6% or 38.3 to 6,285 and in Frankfurt the DAX index added 0.4% or 28.9 to 7,667. In Paris trading, CAC 40 index rebounded 1.2% or 43.1 to 3,730.

Indexes in 12 of the 17 largest markets in Europe advanced after retreating sharply a day ago on political worries.

Indexes in Madrid and in Milan rebounded 1.4% a day after plunging between 2% and 3%.

Spain is scheduled to sell 3.5 billion to 4.5 billion euros of 2-year, 5-year and 16-year bonds on February 7.

Yields on 10-year Italian bond increased to 4.501% and on Spanish bonds traded flat at 5.44%.

Service Sector Growth Diverges Between France and Germany

A private survey revised its estimate of the service sector growth in January. The Eurozone Composite PMI was revised to 48.6 in January from the previous estimate of 48.2 and 47.2 in December.

The 50 mark separates the growth from the shrinkage and below 50 indicates that the service sector is still shrinking but at a slower pace.

The survey also indicated that the gap between Germany and France is widening and Germany ramped up its fastest growth since August 2009 and the growth in France decreased to the lowest in four years.

Stocks in Review

Alfa Laval AB soared 5% to SK143.50 after the heat exchange maker reported fourth quarter profit declined less than expected to SK895 million from SK928 million a year ago.

ARM Holdings Plc gained 3% to 920 pence after the maker of chips for Apple phones and tablets said fourth quarter revenues increased 19% to 164.2 million pounds.

BP Plc increased 1.5% to 469 pence after the second largest oil explorer reported earnings adjusted for one-time items and inventories of $4 billion beating the estimates of at least $3.5 billion. Profit in the year ago period was $5 billion.

Production in the fourth quarter declined 7% to 2.29 barrels of oil equivalent from a year ago quarter, that excluded its Russian venture.

Refining division reported a record profit and for the full-year “underlying replacement profit” was $17.6 billion compared to $21.7 billion in 2011.

BP said its net debt declined to $27.5 billion from $31.5 billion a year ago and declared quarterly dividend of 9 cents a share.

BP also noted in its press release that it will take additional $4.1 billion charge in the quarter to settle various claims arising from the Gulf of Mexico oil spill and total cumulative net charge at the end of 2012 was $42.2 billion.

KPN plunged 22% to 3.20 euros after the largest telecom company in the Netherlands reported a net loss of 162 million euros. The company also said it plans to raise $4 billion capital from shareholders to lower its debt.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc