Stoxx - biggest monthly gain since records began

Stoxx600 is now in positive territory YTD

 > Interesting data point because this could be an inflection point from an Asset Manager's point of view:

--- Fund Managers with a net overweight versus broad equity benchmark indices will now show outperformance
--- Fund Managers with a net underweight will now show underperformance & have to justify their net bearish view

European Stocks Advance This Week, Post Best Month Ever 2009-05-02 07:14 GMT

By Alexis Xydias May 2 (Bloomberg)

Europe’s Dow Jones Stoxx 600 Index resumed gains this week, erasing its loss for the year and posting a record monthly rally amid better-than-expected earnings and speculation that the global recession is easing.

BASF SE, the world’s biggest chemical company, Sanofi- Aventis SA and Siemens AG rose as their profits topped forecasts. Banks surged to the highest since December on expectations the industry is recovering from the credit crisis. The Stoxx 600 added 2.3 percent to 200.23 in the four days this week, its seventh advance in eight weeks.

Europe’s regional benchmark climbed 13 percent in April, the biggest monthly gain since data records began in 1987. The measure, which is now up 0.9 percent for the year, didn’t update yesterday as all European markets except the U.K. and Denmark were closed. Banks led the April advance as Credit Suisse Group AG beat analysts’ profit forecasts and Barclays Plc indicated its first- quarter performance was “well ahead” of last year.

Confidence in the outlook for the European economy rose, a report showed this week, while investors also speculated that government plans to purchase illiquid assets from banks will pull the global economy out of its recession. “We have significant numbers supporting our general expectation that the economy will turn around in late 2009,” said Henrik Drusebjerg, a senior strategist at Nordea in Copenhagen. “If that is the case, equity markets will turn around six to nine months before.”

FTSE 100 The U.K.’s FTSE 100 rallied 2.1 percent in the week, Germany’s DAX rose 2 percent and France’s CAC 40 added 1.8 percent. Sweden’s OMX Stockholm 30 Index lost 2 percent as profit at Ericsson AB fell for a seventh straight quarter. BASF surged 5.3 percent after it reported first-quarter net income of 375 million euros ($498.8 million), beating the 124 million-euro average estimate of analysts. Sanofi jumped 7.5 percent. France’s largest drugmaker said April 29 that first-quarter adjusted net income climbed 16 percent to 2.18 billion euros, helped by increased demand for its Lantus medicine for diabetics. That beat the 1.98 billion- euro median estimate of 10 analysts surveyed by Bloomberg. Siemens, Europe’s largest engineering company, advanced 3.5 percent. 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, the company said on April 29. Analysts in a Bloomberg survey predicted 1.65 billion euros.

More than half of the 132 companies in the Stoxx 600 that reported earnings results from April 7 to April 30 exceeded analysts’ predictions, data compiled by Bloomberg show. That trails the 70 percent of companies in the S&P 500 that beat estimates. DSG International Plc gained 10 percent as the U.K.’s largest consumer-electronics retailer announced plans to raise 310.6 million pounds ($461 million) selling new shares. The company also renegotiated its bank debt as it seeks to speed up store redevelopment plans. Barclays Plc, Britain’s third-largest bank, rose 18 percent. Royal Bank of Scotland Group Plc, the biggest bank majority-owned by the U.K. government, gained 32 percent. UBS AG, Switzerland’s largest bank by assets, added 14 percent.

The Stoxx 600 Banks Index climbed 5 percent to the highest since Dec. 10. The measure, the heaviest among 19 industries in the broader Stoxx 600, tumbled 83 percent from April 2007 to this March as global losses tied to subprime mortgages at financial firms climbed toward more than $1.3 trillion.

The London interbank offered rate that financial companies charge for three-month dollar loans fell to the lowest since June 2003 this week. “Credit is improving and if credit rallies, so should equities,” wrote a team of Credit Suisse strategists in a report, also citing the outlook for an economic recovery. “If ever there were going to be a 50 percent bear market rally, now would be the time,” the report added. Confidence in the outlook for the European economy rose for the first time in 11 months in April, the European Commission said on April 29. An index of executive and consumer sentiment in the 16 nations that use the euro gained to 67.2, more than the 65.6 median estimate of 26 economists surveyed by Bloomberg.