European stocks rose, led by Anglo American Plc and Alcatel SA, as crude oil futures dropped for a second day, easing concern that record energy costs might stifle economic growth. Miners and steelmakers climbed after China's central bank said the country will hold off from raising interest rates. Technology companies gained after STMicroelectronics NV and Hewlett-Packard Co. boosted sales forecasts. The Dow Jones Stoxx 50 Index rose 1 percent to 2669.18 as of 10:10 a.m. in London. The Stoxx 600 added 1.2 percent. The Euro Stoxx 50, a measure for the 12 euro countries, gained 1.3 percent.
``Hewlett-Packard's positive news and the falling oil price are giving the market tailwind,'' said Christian Saalfrank, who manages about $1.2 billion at Helaba Invest in Frankfurt. `` ``Shares reached attractive prices after their dramatic losses in recent days, so chances are good we'll see further gains.'' A falling oil price has helped lift the Stoxx 600 from the 2004 low it touched on Monday, when New York oil futures climbed to a record. Speculation high energy costs will slow economic and profit growth has abated as the oil price falls and the forecasts from ST and Hewlett-Packard point to rising demand.
Basic Materials
Benchmark indexes rose in all 17 Western European markets. Germany's DAX Index added 1.4 percent. France's CAC 40 Index rose 1.3 percent. The U.K.'s FTSE 100 Index increased 0.7 percent. June futures on the Euro Stoxx 50 advanced 1.6 percent. ``European markets are at levels at which we should buy back,'' said Jean-Luc Allain, who helps manage the equivalent of $120 million at Trusteam Finance SCA in Paris. ``Almost all the figures from companies are above expectations.'' The Stoxx 600 was valued at a one-year low of 21.3 times earnings yesterday, compared 23.7 on Thursday, before a two-day sell off. At the beginning of the year, the ratio was 54.
Anglo American, the world's second-biggest mining company, paced gains on the Stoxx 50, adding 3.9 percent to 1,114 pence. China's Central Bank Governor Zhou Xiaochuan said policy makers want more time to assess the effectiveness of measures already taken to cool investment. The country consumes a quarter of the world's traded iron ore and one-sixth of its copper and aluminum. Arcelor, the world's biggest steelmaker, advanced 5.4 percent to 13.45 euros. Antofagasta Plc, which last week said it plans to expand its largest copper mine because of growing demand from China, surged 7.1 percent to 895 pence.
Technology Boost
A growing economy is also boosting demand for computers and other products with microchips. ST, Europe's biggest semiconductor maker, said industrywide chip sales will grow 30 percent this year, lifted by demand for mobile phones and computer products. In January, it forecast 23 percent growth. Hewlett-Packard, the world's second-biggest computer company, forecast second-half revenue will be as high as $40.7 billion. Analysts had estimated $39.7 billion. ST rose 2.7 percent to 17.98 euros. Infineon Technologies AG, Europe's second-biggest chipmaker, gained 3.9 percent to 10.71 euros. Nokia Oyj, the world's biggest mobile phone-maker, added 2.2 percent to 11.4 euros. Alcatel, the world's largest maker of broadband Internet equipment, jumped 4.5 percent to 11.89 euros, the steepest advance on the Euro Stoxx 50. The company said it will sue Fairchild Semiconductor International Inc., a U.S. maker of computer chips, for negligence. The lawsuit, filed in Ontario, seeks C$200 million ($144.2 million) in damages.
Oil Producers Decline
Crude oil dropped 0.6 percent to $40.3 a barrel in electronic trading in New York amid expectations today's U.S. Energy Department report will show the nation's fuel inventories rose last week. The Organization of Petroleum Exporting Countries also said it's ready to pump more oil. The Stoxx 600's energy group was the only one of the 18 industries that fell. Royal Dutch Petroleum Co., which owns 60 percent of Royal Dutch/Shell Group, dropped 0.8 percent to 40.02 euros. Shell Transport & Trading Co., which owns the rest, shed 1.3 percent to 388.75 pence. Total SA, Europe's third-largest oil company, slipped 0.9 percent to 154.1 euros. U.S. gasoline supplies probably increased by 1.5 million barrels last week from 202.5 million, according to the median forecast of 13 analysts surveyed by Bloomberg News. The Energy Department will publish its report at 10:30 a.m. in Washington.
Earnings Reports
Zurich Financial Services AG, Switzerland's biggest insurer, climbed 4 percent to 200.5 Swiss francs after saying first- quarter profit surged to $702 million from $134 million a year ago amid lower investment writedowns and higher premiums. Profit beat the $658 million median forecast of analysts surveyed by Bloomberg News. Rentokil Initial Plc, the world's largest pest-control company, slumped 16 percent to 148.25 pence after saying full- year profit will be ``substantially'' below market forecasts because of waning demand for hygiene services.
Telefonica Moviles SA, Spain's largest mobile-phone company, rose 2.6 percent to 11.8 euros. The company agreed to buy a cell- phone business from Telefonica CTC Chile for $1 billion to create the country's biggest wireless operator. Telefonica SA, which owns 92 percent of Telefonica Moviles and 44 percent of Telefonica CTC Chile, added 2.6 percent to 11.8 euros. MLP AG, Germany's largest independent insurance broker, climbed 5.7 percent to 13 euros, taking its gain to 23 percent since the company said yesterday that first-quarter pretax profit rose 52 percent to 14.6 million euros. Deutsche Bank AG raised its recommendation on the stock to ``buy'' from ``hold.'' ///www.bloomberg.com