European shares recorded the strongest growth in two weeks thanks to favorable news from the corporate sector. Demand for bonds in the region also increased, which helped yields on two-year German government bonds to fall to a record low.
Markets welcomed especially positive restructuring plans of the manufacturer of beer Carlsberg. Although the company has issued a significant loss last quarter, its shares rose 9 percent during trading. German group Henkel rose 8.2% after reporting an unexpected profit. Shares of retail chain Ahold gained 4.8% due to increased sales forecasts. This helped the pan-European FTSEurofirst 300 index to advance by over 1%, which were cleared losses since the beginning of the week. Stock exchanges in Frankfurt and Paris also gained by over 1 per cent.
Prices of European stocks are near three-month high, indicating that traders no longer worry as the likelihood of the US Federal Reserve to start raising interest rates. "Even if there is a single interest rate rise, the markets have sufficient appetite to cover it," said Manoj told Reuters Ladva charge market trading TJM Partners. "Moreover outlook remains loosened monetary policy of the European Central Bank, which largely supports stocks," he added.
On the bond market the Portuguese 10-year bonds rose for a second day, although the government was forced to resign from the leftist opposition. Yields on Spanish bonds also declined, although the scheduled elections in December will probably not give a clear winner. Investors remain positive to the debt securities of the governments of the periphery of the eurozone, as the program of the ECB asset purchase will support them until at least September 2016 In Germany, the yield on two-year government bonds reached minus 0.362 percent. Bond yields decreased when demand for them increases.
Tax returnAmong the negative news from the corporate sector were weak performance of media companies Vivendi and Mediaset, whose shares fell by respectively 6 and 8 per cent. The German manufacturer of lighting Osram lost more than 20 percent of its market value after investors welcomed the presented strategy for growth after the planned sale of a major part of the business.
Overall corporate results in the region were mixed, 50% of companies did not respond to the expectations of analysts. Excluding the energy sector, companies in Europe reported revenue growth on an annual basis by 6%, which is a better result than the US and Japan.