STOCK MARKET WATCH - Wednesday, 1 February 2012

[Ghost Dog]

30. Worst Earnings Since 2006 Fail to Dent European Stock Rally

The highest proportion of European companies on record are missing profit estimates even as the region’s stocks post their best start to a year since 1998.

Siemens AG (SIE) and Ericsson AB (ERICB) are among the 59 percent of Stoxx Europe 600 Index companies reporting earnings that fell short of forecasts during the current quarter, according to data compiled by Bloomberg. That’s the worst ratio since Bloomberg started collating estimates in 2006, with 39 percent of companies missing projections in an average quarter.

Bulls say the Stoxx 600 will extend this year’s 4 percent gain as the region’s stocks are still cheap and efforts by the European Central Bank to boost lending will help liquidity. The rally will fade as analysts’ 2011 earnings projections are too positive even after a 9 percent cut, according to money managers at Robeco Gestions SA and Banque Palatine SA...

... Twenty of the 34 companies in the Stoxx 600 that released results from Jan. 9 through yesterday had per-share earnings that trailed behind analyst estimates, data compiled by Bloomberg show. Earnings for members of the gauge probably rose by 12 percent on average in 2011 and may increase a further 7 percent this year, according to more than 12,000 analyst forecasts compiled by Bloomberg.

The Stoxx 600 rallied 4 percent in January, the best start to a year since 1998, Bloomberg data show. The measure advanced 20 percent from its Sept. 22 low through Jan. 26, entering the second bull market in less than a year. The index climbed 1.3 percent to 257.66 at 9:24 a.m. in London today. The surge in stocks is outpacing earnings prospects as Spain’s economy shrinks and borrowing costs in Portugal this week climbed to a euro-era record, according to Matthieu Giuliani, who helps oversee $4 billion at Banque Palatine in Paris.

/... http://www.bloomberg.com/news/2012-02-01/worst-earnings-since-2006-in-europe-fail-to-dent-rally-in-region-s-stocks.html