Stocks gain worldwide as companies' profits climb

Stocks in Europe and Asia rose and US futures gained as earnings at companies from Siemens AG and Sanofi-Aventis SA to China Petroleum & Chemical Corp showed that profits are weathering the worst of the global recession.

Siemens, Europe’s largest engineering company, advanced 6.3 per cent after reporting a steeper-than-estimated jump in earnings. Sanofi, France’s biggest drugmaker, rose 3.2 per cent as first-quarter profit soared. China Petroleum, also known as Sinopec, increased 3.6 per cent in Hong Kong after saying the first-half profit may climb more than 50 per cent.

The MSCI World Index rose for the first time in three days, adding 0.9 per cent at 1:33 pm in London. The gauge of 23 developed markets has climbed 27 per cent since March 9 as companies from American Express to Ford Motor posted earnings that topped estimates and investors speculated US Treasury Secretary Timothy Geithner’s plan to finance the purchase of as much as $1 trillion in illiquid assets from banks would help to pull the global economy out of a recession.

“It’s not as dull and as black as you would have expected a quarter ago,” said Petra Kerssenbrock, an equity strategist at Commerzbank AG in Frankfurt. Profit “outlooks are slightly improving,” she said.

Stocks pared some of their advance after a Commerce Department report showed the US economy contracted more than forecast in the first quarter. Gross domestic product dropped at a 6.1 per cent annual pace.

Swine flu
Standard & Poor’s 500 Index futures increased 0.9 per cent today. The benchmark index for US equities lost 0.3 per cent yesterday as concerns that banks need more capital and the swine-flu outbreak will thwart an economic recovery offset a bigger-than-expected jump in consumer confidence.

At least seven countries have confirmed cases of swine flu, including the US, the UK, Canada, New Zealand and Mexico, laying the seeds for a possible global pandemic, according to the World Health Organization. Germany verified its first cases of the disease today.

Europe’s Dow Jones Stoxx 600 Index advanced 1.3 per cent as more than four stocks gained for every one that dropped. Retail sales in the region declined by the least in 11 months in April, helped by the Easter holiday and improved consumer confidence from government stimulus.

Europe confident
Confidence in the outlook for the European economy rose for the first time in 11 months in April, according to the European Commission. An index of executive and consumer sentiment in the 16 nations that use the euro gained 67.2, more than the 65.6 median estimate of 26 economists surveyed by Bloomberg.

The German economy will return to growth next year, the Economy Ministry said today. The Berlin-based government department said Europe’s largest economy will expand 0.5 per cent in 2010, revising the previous 2.25 per cent contraction forecast made in January.

The MSCI Asia Pacific excluding Japan Index rose 3.1 per cent, with the Japanese market being shut for a holiday. Samsung, the world’s second-largest plasma-display maker, jumped 8.3 per cent in Seoul after Hana Daetoo Securities said the company’s earnings would improve.

More than half of 105 companies in Europe’s Stoxx 600 that reported results since April 7 exceeded analysts estimates, while 67 per cent of S&P 500 companies beat, data compiled by Bloomberg show. The first three months of 2009 are poised to mark the seventh straight quarter of falling US profits, the longest stretch since at least the Great Depression.

Siemens rose 6.3 per cent to 50.44 euros, the highest since January. Operating profit at the company’s main industry, energy and health-care units, referred to as “sector profit,” climbed to 1.84 billion euros from 1.29 billion euros.

Sinopec gained 3.6 per cent to HK$5.80. The company said profit is expected to grow after the government eased fuel-price controls and oil slumped from a record. First-quarter net income jumped 85 per cent, Sinopec said.

Samsung SDI, which reported a first-quarter loss yesterday, climbed 8.3 per cent to 90,000 won in Seoul. Hana Daetoo Securities raised its recommendation to “buy,” saying earnings will improve “rapidly” starting in the second quarter.