CRH Plc rallied 12 percent, leading a gauge of construction companies to the biggest gain in six months. Colruyt NV (COLR) jumped 16 percent as Belgium’s biggest discount food retailer reported a surprise increase in profit. Barclays Plc (BARC) slumped 19 percent after paying a record fine to settle claims it sought to rig the London and euro interbank offered rates.
The Stoxx Europe 600 Index (SXXP) climbed 1.9 percent to 251.17 this past week, extending the longest stretch of gains since January, after policy makers eased repayment rules for Spanish banks, relaxed conditions for possible aid to Italy and unveiled a $149 billion economic growth plan. The advance pushed the measure to the highest level since May 11 and trimmed the second-quarter decline to 4.6 percent.
“The results were as good as we could have expected from the summit,” said Derry Pickford, who helps oversee $1.7 billion at Ashburton Ltd. in Jersey, the Channel Islands. “There are two important caveats: expectations were very low and the measures are short-term analgesics rather than fundamental cures.”
National benchmark indexes climbed in all 18 western European markets this week. The U.K.’s FTSE 100 increased 1 percent, France’s CAC 40 rose 3.4 percent and Germany’s DAX added 2.4 percent. Norway’s OBX (OBX) surged 5.9 percent for the biggest gain this year.
Monthly Rally
The Stoxx 600 rallied 4.8 percent this month, the most since October. The increase brought the index’s advance in the first half of 2012 to 2.7 percent.
After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels yesterday, leaders of the 17 euro nations dropped the requirement that governments get preferred-creditor status on crisis loans to Spain’s banks and opened the door to recapitalizing lenders directly with bailout funds once Europe sets up a single banking supervisor. They also discussed reducing the market pressure on Italy and Spain by allowing them to access rescue loans without relinquishing control of their economies.
Attention will now turn to the European Central Bank, which holds its next policy meeting on July 5. The bank has acted following political progress before, buying bonds after the establishment of bailout programs in 2010 and giving banks unlimited three-year loans following last year’s pledge to deliver fiscal discipline.
Rate Cut
Officials will lower their benchmark interest rate by 25 basis points to a record low 0.75 percent, according to the median forecast in a Bloomberg survey of 57 economists. Five predict a cut of 50 basis points and 12 foresee no change.
“Equities have put on a good showing at the end of the first half of the year,” said Jeremy Batstone-Carr, head of research at Charles Stanley & Co. in London. “Investors are pinning their hopes on additional monetary easing. But we are still fading rallies and not yet looking to buy the dips.”
In the U.S., data released on June 27 showed durable-goods orders and pending home sales beat economists’ forecasts. The Institute for Supply Management-Chicago Inc. said yesterday its business activity barometer increased to 52.9 this month from 52.7 in May. A reading of 50 is the dividing line between growth and contraction. Economists in a Bloomberg survey had projected a decline.
Construction companies led gains in the Stoxx 600 this week, climbing 4.5 percent as a group. CRH, the world’s second- biggest maker of building materials, advanced 12 percent in London trading, the most since December. Lafarge SA, the largest cement maker, rose 6.1 percent.
Colruyt Climbs
Colruyt jumped 16 percent as the Belgian retailer reported a surprise increase in profit amid heightened price awareness among consumers. Earnings in the fiscal year that ended March 31 rose to 2.18 euros a share from 2.14 euros. Analysts had projected a decline to 2.09 euros, according to the average of 21 estimates compiled by Bloomberg.
Fertilizer makers rallied as corn prices surged after inventories tumbled the most in 16 years and hot, dry weather eroded prospects for crops in the U.S.
Yara International ASA, the world’s biggest publicly traded nitrogen-fertilizer maker, and K+S AG, Europe’s largest potash producer, each surged 12 percent. Syngenta AG, the biggest maker of crop chemicals, rose 5.2 percent.
Marine Harvest ASA (MHG), the world’s biggest salmon farmer, advanced 12 percent. Norway’s salmon-export prices increased 6.4 percent in a week, according to Statistics Norway in Oslo.
Banks Decline
Even after the measures announced at the European Union summit, bank shares posted the second-worst performance among the 19 industry groups in the Stoxx 600.
Barclays Plc, Britain’s second-largest bank by assets, slumped 19 percent for the biggest decline since August. The company will pay a record 290 million-pound ($455 million) fine after investigators found traders and senior managers “systematically” tried to manipulate Libor, the benchmark rate for $360 trillion of securities. Royal Bank of Scotland Group Plc declined 11 percent.
Infineon Technologies AG slid 14 percent after Europe’s second-largest semiconductor maker said sales in the current quarter would miss its prediction. The company will probably reduce its profit forecast again, according to JPMorgan Chase & Co., which downgraded the stock to neutral.
From Bloomberg
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