European stocks climb for third week; Valeo rallies

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) — Europe’s benchmark stock index posted a third-straight week of gains on Friday, with Valeo SA rallying after reporting earnings, and BAE Systems PLC and Rémy Cointreau SA climbing after broker upgrades.

The Stoxx Europe 600 index

/quotes/zigman/2380150/realtime XX:SXXP
+0.39%

added 0.4% to close at 336.09, marking a 0.8% rise on the week. The three weeks in positive territory was the longest weekly winning streak since November last year.

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Emerging Asian markets hold promise

Opportunities still abound in some Asian emerging markets, including China and India, says Rahul Chadha, co-chief investment officer at Mirae Asset Global Investments in Hong Kong.

The index broke a four-day winning run on Thursday after disappointing Chinese manufacturing data stirred renewed concerns about slowing growth in emerging markets. In January, China’s manufacturing purchasing managers index also missed expectations and partly triggered a global market rout, where emerging-market currencies were hit especially hard.

But despite the heightened uncertainty, analysts remained upbeat on riskier assets, such as equities. Barclays said China is a risk, but nothing worth hedging against at the moment. Instead, the main worry remains the threat of eurozone deflation, the analysts argued. Euro-zone inflation data are out next week and a weak number is likely to trigger a wider discussion about further monetary easing leading up to the European Central Bank’s March meeting.

In Friday’s trade, shares of Valeo

/quotes/zigman/168105/realtime FR:FR
+12.63%

rallied 13% after the French auto-parts maker said profit rose 18% in 2013.

Rémy Cointreau SA

/quotes/zigman/165074/realtime FR:RCO
+1.19%

gained 1.2% after Barclays raised the alcoholic-beverage maker to overweight from equal weight. The analysts said it is the distiller most-geared toward China and will benefit from “low penetration rates and attractive wealth demographics” in the country.

Shares of BAE Systems

/quotes/zigman/213625/realtime UK:BA
+2.72%

/quotes/zigman/259559/delayed/quotes/nls/baesy BAESY
+2.15%

added 2.7% after Société Générale lifted the aerospace and defense firm to buy from hold. On Thursday, the U.K. company dropped 8.3% after posting a fall in 2013 profit.

Bucking the positive trend, shares of Kering SA

/quotes/zigman/126262/realtime FR:KER
-2.29%

dropped 2.3% in Paris after the Gucci owner posted a 95% decline in profit last year amid signs of lower demand in China.

On a relatively quiet data day in Europe, U.K. retail sales were the main focus on the numbers front. The Office for National Statistics said sales fell 1.5% in January from the previous month, but the institution cautioned that the drop came after a solid rise in December sales. Year-over-year, January retail sales picked up 4.3%, and analysts stressed that the underlying strength of the U.K. consumer spending is broadly intact. Another factor to keep in mind is that the January data covered an extremely wet period with serious floods in parts of the country.

In the afternoon, data from the U.S. showed existing-home sales in January were the slowest in more than a year. But the weak report was blamed on the exceptionally hard winter and didn’t dent sentiment on the U.S. stock markets where all major benchmarks traded higher.

In Europe, France’s CAC 40 index

/quotes/zigman/3173214/realtime FR:PX1
+0.59%

rose 0.6% to 4,381.06, ending the week 0.9% higher. Germany’s DAX 30 index

/quotes/zigman/2380246/realtime DX:DAX
+0.40%

climbed 0.4% to 9,656.95, trimming its weekly loss to 0.1%.

The U.K.’s FTSE 100 index

/quotes/zigman/3173262/realtime UK:UKX
+0.37%

gained 0.4% to 6,838.06 for a 2.6% advance on the week.

Vodafone Group PLC

/quotes/zigman/421253/realtime UK:VOD
+3.01%

/quotes/zigman/101873/delayed/quotes/nls/vod VOD
+0.67%

rose 3% in London after the wireless-telecom firm said the deal to sell its 45% stake in Verizon Wireless to Verizon Communications Inc.

/quotes/zigman/262341/delayed/quotes/nls/vz VZ
-1.77%

was completed on Friday. Traders said the deal is likely to significantly impact trading patterns in coming weeks, with trading volumes on Friday and Monday and Tuesday next week expected to be affected.

Vodafone on Wednesday said shareholders will receive 0.026 shares in Verizon Communications for each Vodafone share they own.

Royal Bank of Scotland Group PLC

/quotes/zigman/10330253/realtime UK:RBS
+1.24%

/quotes/zigman/530544/delayed/quotes/nls/rbs RBS
+0.17%

put on 1.2% after Financial Times reported the bank will cut at least 30,000 jobs in the coming years, mainly from its investment-banking activities and international businesses. A representative from RBS declined to comment on the report.