European Stocks Rise After Draghi Stimulus Comments

Bloomberg: European (SXXP) stocks climbed, with the benchmark index heading for its ninth straight monthly gain, as European Central Bank President Mario Draghi and Federal Reserve Chairman Ben S. Bernanke signaled they would maintain monetary support measures.

Bayer AG (BAYN) increased to the highest price in more than four weeks after saying sales will rise 4 percent to 5 percent this year. Telefonica (TEF) SA added 1.9 percent as Spain’s biggest phone company reported fourth-quarter earnings that beat analysts’ estimates. Royal Bank of Scotland Plc slid to its lowest price in three weeks after posting a wider full-year loss.

The Stoxx Europe 600 Index gained 0.5 percent to 288.49 at 12:38 p.m. in London, extending its advance this month to 0.5 percent, for its longest monthly winning streak since 1997.

“Thanks to a strong mix of positive business results and signals of central banks remaining expansive, the upward trend on equity markets is strengthened and may continue,” said Daniel Gschwend, portfolio manager at Diem Client Partner AG in Zurich, which oversees more than 1 billion Swiss francs ($1.08 billion) in assets. “Looking at this long winning streak, however, I expect a substantial correction will soon be needed.”

Draghi signaled the bank has no intention of tightening monetary policy anytime soon with inflation projected to “significantly” undershoot its 2 percent target next year.

While the ECB’s balance sheet may shrink naturally as confidence returns to financial markets and banks repay emergency loans, policy makers are far from considering an exit from monetary stimulus, Draghi said at an event in Munich late yesterday.

Bernanke Defends

Bernanke yesterday defended record stimulus to Congress, saying accommodation has helped reduce borrowing costs and spur growth. He also said the central bank may decide to hold bonds on its $3.1 trillion balance sheet to maturity as part of a review of its strategy for an exit from record monetary easing.

Italy is headed for a broad coalition government as bondholders pressure Pier Luigi Bersani andSilvio Berlusconi to set aside their rivalries and form a partnership, said Finance Undersecretary Gianfranco Polillo.

In the U.S., data at 8:30 a.m. New York time may show that initial jobless claims dropped last week.

Bayer increased 2.5 percent to 75.70 euros after saying sales will rise to about 41 billion euros ($53.9 billion) this year. Fourth-quarter earnings before interest, taxes, depreciation, amortization and special items increased 18 percent to 1.83 billion euros from 1.54 billion euros a year earlier, in line with analysts’ estimates.

Telefonica Beats

Telefonica added 19 cents to 9.99 euros after reporting fourth-quarter earnings that beat analysts’ estimates as sales growth in Latin America helped to offset revenue declines in its domestic market. Operating income before depreciation and amortization fell 8.6 percent to 5.45 billion euros, compared with projections for 5.44 billion euros.

HSBC Holdings Plc (HSBA) gained 1.3 percent to 734.3 pence, contributing the most to the Stoxx 600’s advance. Europe’s largest bank by market value may say pretax profit in 2012 rose 7.4 percent to $23.5 billion when it reports earnings on March 4, according to the median estimate of 26 analysts in a Bloomberg News survey.

Standard Chartered Plc (STAN) may say pretax profit last year climbed to $7.12 billion from $6.78 billion, according to the median estimate of 33 analysts. The stock increased 1.2 percent to 1,797 pence.

IAG Rallies

International Consolidated Airlines Group SA (IAG) rallied 7.7 percent to 238.7 pence, its highest price since Aug. 1, 2011. Europe’s third-largest carrier had a full-year operating loss of 23 million euros, excluding one-time items, compared with a 485 million-euro profit a year earlier. Analysts had expected an 88 million-euro loss.

RBS (RBS) slid 4.2 percent to 332.1 pence. Britain’s biggest taxpayer-owned lender posted a wider full-year loss after it set aside a further 1.1 billion pounds ($1.6 billion) to compensate clients wrongly sold insurance and swaps. The net loss swelled to 5.97 billion pounds from 2 billion pounds in the year-earlier period, missing the average 5.1 billion-pound analyst estimate.

Deutsche Telekom AG (DTE) slid 1.1 percent to 8.14 euros. Adjusted fourth-quarter earnings before interest, taxes, depreciation and amortization fell 13 percent to 4.03 billion euros. Revenue slipped 1.4 percent to 14.7 billion euros. Analysts on average projected profit of 4.16 billion euros on sales of 14.6 billion euros, according to data compiled by Bloomberg.

The volume of shares changing hands in Stoxx 600-listed companies was 21 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

 reporter on this story: Corinne Gretler in Zurich