European Stocks Extend Record Rally on Lift From Insurers, M&A Activity

The pan-European STOXX 600 index inched up 0.1%, extending gains to a ninth consecutive session.

British insurer Aviva rose 3.5% after saying it would return at least 4 billion pounds ($5.5 billion) to shareholders, while Zurich Insurance Group added 3.8% on reporting a 60% jump in first-half business operating profit.

Dutch insurer Aegon NV jumped 7.3% after posting much better than expected second-quarter earnings.

Deutsche Telekom rose 2.8% after raising its profit outlook for the second time this year.

The benchmark STOXX 600 clocked its longest winning streak since June, as earnings reports and optimism related to the pace of vaccination across Europe reinforced investor confidence in an economic recovery.

Data showed Britain’s economy grew by a faster than expected 1% in June, after many hospitality firms restarted indoor service in mid-May and as more people visited doctors following the pandemic, lifting healthcare.

Factory output fell in June in the euro zone, as Germany, the bloc’s industrial powerhouse, faltered amid supply bottlenecks, European Union estimates showed.

“The second successive monthly fall in euro-zone industrial production in June was largely due to ongoing supply-chain difficulties in Germany,” said Andrew Kenningham, chief Europe economist at Capital Economics.

“As these will ease only slowly, we don’t expect industry to contribute much to economic growth in the coming months, even though demand is still red hot,” Kenningham added.

Cineworld Group rose 3.9% after it said it was considering a listing of itself or a partial listing of its movie chain Regal on Wall Street.

Meanwhile, Adidas rose 1.6% after selling its Reebok brand to Authentic Brands Groups for up to 2.1 billion euros ($2.5 billion), as the German sporting goods company sought to draw a line under an ill-fated investment.

Stock Spirits Group soared 43.7% funds as funds affiliated with private-equity firm CVC agreed to take over the London-listed vodka maker in a deal valuing it at 767 million pounds ($1.1 billion).

Dragging down miners, UK-listed shares of global miner Rio Tinto slipped 5.5% on trading ex-dividend.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar and Shreyashi Sanyal in BengaluruEditing by Shounak Dasgupta and David Holmes)

Activist Cevian Takes 5% Stake in British Insurer Aviva

“Aviva has been poorly managed for many years, and its high-quality core businesses have been held back by high costs and a series of bad strategic decisions,” Christer Gardell, managing partner and co-founder of Cevian said in a statement.

Aviva should have a value of more than eight pounds per share within three years, and more than double its dividend to 45 pence, Cevian said.

Aviva’s shares are currently trading a little over four pounds a share.

Aviva said last month it had raised 7.5 billion pounds from recent disposals and planned to return money to shareholders, without putting a figure on it.

Analysts have said the insurer would have between 3.7 and 6.6 billion pounds of excess capital following the completion of the asset sales.

“Aviva has made significant strategic progress over the past eleven months and we remain sharply focused on further improving our performance,” an Aviva spokesperson said in an emailed statement.

“We regularly engage with investors and welcome any thoughts which move us towards our goal of delivering long term shareholder value”.

($1 = 0.7063 pounds)

(Reporting by Carolyn Cohn; Editing by Rachel Armstrong)

Meggitt, Real Estate Stocks Lead Ftse 250 Higher; Equiniti Group Shines

By Devik Jain

The domestically focused FTSE 250 index rose 0.1%, with aero and defence stocks adding 1.5%. Meggitt gained 2.9% after UBS upgraded the stock to “neutral” from “sell”.

The FTSE 100 traded flat, with base metal miners adding 2% and offsetting losses in oil majors BP and Royal Dutch Shell. [O/R][MET/L]

Asian shares traded cautiously ahead of U.S. GDP and jobless claims numbers later in the day, while investors awaited key U.S. data due on Friday to gauge whether inflationary pressures were transient or signalled a more durable turn. [MKTS/GLOB]

“Things get more exciting this evening … we are likely to see more risk being taken off the board into that data dump,” said Jeffrey Halley, a senior market analyst at OANDA.

“With the street suddenly on edge again, indicators of potentially higher inflation will see the sell-off accelerate. At the same time, a benign data set should get us back to the week’s business as usual.”

The FTSE 100 index has gained 8.8% year-to-date on optimism that speedy vaccine rollouts and constant policy support from the government would drive a stronger recovery from a pandemic-led recession.

Among other stocks, Equiniti Group jumped 7.5% after the British administration services and payments specialist agreed to be taken over by a new company backed by private-equity firm Siris Capital in a 673 million pound ($949 million) deal.

Johnson Matthey slipped 2.3% after the chemicals maker warned that rising metal prices could hit its cash flow.

Insurer Aviva rose 2.6% after it recorded steady sales performance in its life insurance business and a 4% rise in general insurance, and repeated its promise to give cash back to shareholders.

(Reporting by Devik Jain in Bengaluru; Editing by Subhranshu Sahu)

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