Philips profit boosts European markets

LONDON – European stock markets rose strongly Monday as investor sentiment was buoyed by better than expected third-quarter profits from Royal Philips Electronics NV at the start of a week when earnings statements around the world will be the main focus of attention.
The news that Philips, Europe's biggest consumer electronics company, made a net profit of euro174 million ($256 million) in the third quarter stoked market hopes that businesses around the world have weathered the worst of the economic storm and are poised to take advantage of the global recovery. Philips shares rose around 6 percent.
Britain's FTSE 100 index of leading British shares rising to its highest level for over a year. By early afternoon London time, the FTSE was up 60.83 points, or 1.2 percent, at 5,222.77 — that's the first time it has broken through the 5,200 barrier since September last year.
David Jones, chief market strategist at IG Index, said the move through 5,200 is significant.
'This area had successfully capped any strength since the middle of September and today's levels are the highest seen for more than a year, which should help banish any worries that the recovery was running out of steam,' he said.
Meanwhile, Germany's DAX rose 88 points, or 1.5 percent, to 5,799.88 while France's CAC-40 was 53.98 points, or 1.4 percent, higher at 3,853.59.
U.S. stocks are also set to open higher later though trading is expected to be fairly light as much of the country celebrates Columbus Day federal holiday. Dow futures were up 59 points, or 0.6 percent, at 9,866 while the broader Standard & Poor's 500 futures rose 7.3 points, or 0.7 percent, to 1,075.40.
Philips' better than expected results came as investor attention is firmly focused on the third-quarter results season. Most interest this week will be on major U.S. financial institutions such as Citigroup Inc., Bank of America Corp, Goldman Sachs Group Inc. and JP Morgan Chase & Co.
'Although the gradual stabilization in the global economic outlook helped equity markets stage a robust upswing since the turnaround in late Q1, questions remain about the sustainability of the recovery and uncertainty in the market is still high,' said Silvio Peruzzo, an analyst at Royal Bank of Scotland.
The financial sector, which led the market down at the outset of the crisis, generally outperformed other sectors, leading the market on the way up since March's lows.
In particular, investors will be looking to see how much companies have been able to drive up earnings by generating revenues as opposed to cost-cutting measures.
'Strong corporate results for Q3 would contribute significantly to the process of market normalization, increasing risk tolerance further and supporting market confidence,' said Peruzzo.
Last week, the Dow closed at 9,864.94, its highest level since October 6 last year. Over the week, the Dow added 4 percent, while the S&P 500 advanced 4.5 percent.
Earlier, before the optimism about upcoming earnings took root in Europe, Asian stocks were mostly lower.
Hong Kong's Hang Seng closed down 200.09 points, or 0.9 percent, at 21,299.35 and South Korea's Kospi dropped 0.4 percent to 1,639.81. Australia's benchmark index fell 0.3 percent, while China's Shanghai index slipped 0.6 percent at 2,894.48.
Japan's stock market was closed for a holiday.
Elsewhere, Singapore's index was up 0.9 percent after the government narrowed its forecast for economic contraction this year and said the economy grew for the second straight quarter in the July to September period.
Oil prices rose amid the mounting optimism. Benchmark crude for November delivery climbed $1.31 to $73.08 a barrel.
The dollar, which has been on the retreat over recent weeks, rose 0.4 percent to 90 yen while the euro was up 0.3 percent at $1.4768.