European Stocks Climb as Spanish Bond Yields Drop
European stocks climbed for a second day, their first back-to-back gains in three weeks, as Spanish bond yields fell following a report the country will soon seek a sovereign bailout.
Wolseley Plc advanced 1 percent as the plumbing supplier said it plans a special dividend. PostNL NV (PNL) jumped 4.8 percent after the postal company said it will increase rates next year. Alstom (ALO) SA sank 4.7 percent after selling a 350 million-euro ($453 million) stake.
The Stoxx Europe 600 Index (SXXP) gained 0.1 percent to 272.68 at 2:39 p.m. in London after earlier falling as much as 0.7 percent. The equity benchmark has rallied 17 percent from this year’s low on June 4 as central banks in the U.S. and the euro area turned to bond purchases to stimulate growth and ensure the transmission of record-low interest rates.
“Without question the bond markets would have a fit if Spain doesn’t take a bailout — spreads have come in on the assumption that they will take it,” said David Hussey, who helps oversee $218 billion as head of European equities at Manulife Asset Management in London. “If they take the bailout, the cost to funds will come down. It takes away the tail risk of the country sprawling into a deflationary hole.”