European Resource Stocks Rally Again, Arcelor Plans $3 B Offering

Lucy Stoeva
05 Feb, 2016
New York City

European stock trading was volatile and markets were mixed on the weak U.S. jobs data and a rally in mining, and gains in banking and retail sector. ArcelorMittal plans to launch a $3 billion offer to reduce net debt of $12 billion. BNP Paribas plans to cut costs and increase its dividend.

[R]4:00 PM Frankfurt, Germany – European stock trading was volatile and markets were mixed on the weak U.S. jobs data and a rally in mining, and gains in banking and retail sector. ArcelorMittal plans to launch a $3 billion offer to reduce net debt of $12 billion. BNP Paribas plans to cut costs and increase its dividend.[/R]

European stock markets were mixed on Friday as the negative surprise from the U.S. jobs data was offset by a strong rally in mining stocks, as well as gains in retail and banking sectors.

The latest U.S. job data showed non-farm payrolls rose 151,000 in January, down from an increase of 292,000 in December.

Unemployment rate stood at 4.9%, the lowest in eight years and average hourly wage also increased.

The weak job growth makes the scenario for a Fed interest rate hike in March less likely, especially after the central bank had raised its short-term interest rate in December.

Leading mining stocks extended yesterday’s rally as the U.S. currency weakened after the persistent sell-off in the last four weeks.

Anglo American soared 34.7%, Glencore jumped 20.3%, BHP Billiton was up 10.6%, and Rio Tinto climbed 8.8%.

In the U.K, retail comparable-store sales in the five weeks to January-end rose 1.4% from the year-earlier period, said BDO in its monthly High Street Sales Tracker report.

Fashion retailers sales increased 1.9% from a year ago period.

Tesco jumped 4.4%, Marks & Spencer Group added 2.3%, and home improvement retailer Kingfisher gained 3.2%.

In London, FTSE 100 index increased 67.89, or 1.16%, to 5,905.03 and in Frankfurt, the DAX index declined 17.60 or 0.19%, to 9,417.22.

In Paris, the CAC 40 index added 7.4, or 0.18%, to 4,234.36.

ArcelorMittal rebounded from early losses and added 4.30% to €3.47 late in the day after the giant steelmaker said it would issue shares worth $3 billion to reduce debt and deal with declining steel prices.

The Mittal family, which already owns about 40% of the company, will subscribe to its entitlement of the share issue for $1.1 billion.

BNP Paribas SA surged 7.69% to €42.59 after the largest French bank announced a cost cutting program in investment banking that aims to save €1 billion in costs by 2019.

The bank also proposed dividend of €2.31 per share for 2015, up from €1.50 a year earlier.

Revenue in the fourth quarter increased 3% to €10.45 billion from the year-ago period.

Net income dropped 52% to €665 million euros due to a goodwill write-down on its Italian banking unit.

Finmeccanica SpA plunged 9.4% to €9.44 after the Italian prosecutors launched its investigation of the deal merger deal with Japan-based Hitachi.

Nokian Renkaat Oyj gained 8.1% to €34.02 after the Finnish tire maker said fourth-quarter net sales increased 11.1% to €422.3 million from the same period a year ago.

Operating profit rose 22.4% to €94.8 million, but net profit tumbled to a loss of €16.8 million due to additional taxes and punitive interest of €94.1 million.

Volvo AB soared 9.5% to 82.7 Swedish kronor after the vehicle maker announced fourth-quarter profit of 2.60 billion kronor, compared to a net loss of 2.96 billion kronor a year ago.

Revenues increased to 79.64 billion kronor, up from 77.48 billion kronor a year ago as the sales growth in Europe and North America offset the decline in Latin America.

The company reaffirmed its proposed dividend for 2015 to match the previous year dividend at 3 Swedish kronor per share.