European stocks at 7-week high close to erasing Brexit drop

Bloomberg

European equities traded at a seven-week high, coming close to erasing their post-Brexit losses, boosted by optimism in the recovery as companies from Zurich Insurance Group AG to KBC Group NV posted profit that beat estimates.
Zurich Insurance added 4.5 percent after saying earnings fell less than projected. Belgian lender KBC advanced 5.5 percent after posting better-than-expected profit and revenue and cutting its forecast for 2016 loan-loss provisions in Ireland. RWE AG climbed 3.4 percent after the German utility said its quarterly loss narrowed.
The Stoxx Europe 600 Index rose 0.5 percent at 4:03 p.m. in London, erasing an earlier drop to rise for a sixth time in seven days. Optimism that central banks will support growth and a better-than-forecast jobs report in the US have helped fuel the recent gains, with volatility expectations falling to the lowest levels in a year.
The equity gauge is 0.2 percent away from erasing the slump following the U.K. vote to leave the European Union.
“With a lack of negative news-flow the market will continue to rise,” said Guillermo Hernandez Sampere, the head of trading at MPPM EK in Eppstein, Germany. “The old problem of finding yield is supportive for the stock market, and we already had our yearly shock in the first part of the year.
With low volatility and trading volumes it’s more difficult for bears to short the market. This is more a market for the bulls and I’m one of them.”
The volume of Stoxx 600 shares changing hands was about a third lower than the 30-day average. While bond yields reach record lows, investors in companies from the benchmark gauge have a dividend rate of 3.6 percent. On a price-earnings ratio basis, its valuation of 15 times estimated profits is approaching this year’s high.
Among other stocks moving on corporate news, Henkel AG & Co. rallied 5.3 percent as the maker of adhesives and Persil washing powder posted profit that beat projections and said an improvement in margins for the full-year will go beyond its initial target. Swiss Life Holding AG rose 2.5 percent after reporting an increase in first-half earnings.
K+S AG, Europe’s biggest potash producer, sank 6.4 percent after saying it expects lower earnings in 2016. U.K. insurer Old Mutual Plc lost 4.1 percent after reporting earnings that missed analyst estimates and saying the rest of the year will be fraught with challenges.
Here is a snapshot of the moves in major western-European stock indexes:
The UK’s FTSE 100 Index reversed an earlier decline to rise 0.4 percent. Property-related companies as the Royal Institution of Chartered Surveyors said demand and sales of houses fell in July. Germany’s DAX Index advanced 0.6 percent, with Henkel and RWE leading gains.
Siemens AG is set to close at its highest price since 2007. France’s CAC 40 Index added 0.9 percent. Construction company Vinci SA, up 2.6 percent, is heading for its most expensive level since 1998. The Swiss Market Index climbed 0.9 percent, boosted by gains in Zurich Insurance and Swiss Life. Nestle SA climbed to a record after Societe Generale SA recommended buying the stock.