European Stocks Gain After U.S. Fed Minutes

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An employee passes a sign inside London Stock Exchange Group Plc's offices in London. Photographer: Simon Dawson/Bloomberg

European stocks gained for a third day, trimming the Stoxx Europe 600 Index’s biggest monthly drop since 2008, as Federal Reserve minutes showed some policy makers wanted to add to economic stimulus measures. Asian shares and U.S. index futures rose.

Bouygues SA (EN) soared 11 percent after announcing a buyback.Smith & Nephew Plc (SN/), Europe’s biggest maker of artificial hips and knees, rallied 2.9 percent amid takeover speculation. Carrefour SA (CA) declined 3.8 percent after the world’s second- largest retailer cut its forecast for annual profit.

The Stoxx 600 advanced 0.2 percent to 231.13 at 8:13 a.m. in London. The index has still tumbled 13 percent this month, the biggest drop since October 2008, as European and U.S. economic reports trailed forecasts, adding to concern that the recovery is at risk. The decline has left the measure trading at about 9.7 times estimated earnings, near the cheapest since March 2009, data compiled by Bloomberg show.

The minutes were “taken as a good signal because the majority agreed and the Fed said it has tools that it hasn’t yet used,” said Arnaud Scarpaci, a fund manager at Agilis Gestion SA in Paris, which oversees about $110 million. “Everyone thinks the Fed will put some sort of buying program into action to help the economy.”

Fed Minutes

Fed policy makers debated ways to invigorate the recovery and hiring this month, potentially laying the groundwork for fresh action at their next gathering in September, according to minutes of their latest meeting released late yesterday. A few members of the Federal Open Market Committee favored a “more substantial move” at the Aug. 9 meeting beyond the pledge adopted by the panel to hold rates at record lows for the next two years.

Standard & Poor’s 500 Index futures advanced 0.3 percent today and the MSCI Asia Pacific Index climbed 0.9 percent.

U.S. Factory orders rose 2 percent in July after a 0.8 percent decline the prior month, a report from the Commerce Department will show today, according to a Bloomberg survey of economists. Data from ADP Employer Services may show companies added 100,000 workers this month, two days before the Labor Department’s monthly jobs report, which is forecast to show payrolls climbed by 75,000 in August after an increase of 117,000 in July.

“Economic numbers haven’t been too good, but there still is growth,” said Scarpaci. “It’s too early to anticipate a double dip.”

Bouygues Buyback

Bouygues rallied 11 percent to 25.52 euros, the biggest gain since 2008. The French building, television and telecommunications company said it plans to buy back 1.25 billion euros in stock to take advantage of equity declines to lift earnings per share.

Smith & Nephew gained 2.9 percent to 614 pence. Newspapers including The Guardian, TheDaily Mail and The Independent said companies from Stryker Corp. to Biomet Inc. may be interested in bidding for the company.

Carrefour slid 3.8 percent to 17.93 euros. The retailer cut its forecast for current operating income this year, saying the profit measure will decline by around 15 percent. Carrefour will implement a new commercial strategy in France, its biggest market, to boost growth in an “increasingly challenging economic environment.”

Vivendi SA (VIV) climbed 4.1 percent to 16.85 euros as the owner of the world’s largest video-game and music companies reported second-quarter profit excluding one-time gains and costs of 884 million euros ($1.28 billion). Analysts had predicted earnings of 780 million euros, according to the average of seven estimates compiled by Bloomberg.

L’Oreal SA (OR), the world’s largest cosmetics maker, declined 2 percent to 75.44 euros. The cosmetics maker said operating profit rose 2 percent to 1.7 billion euros in the first half, missing the median estimate of nine analysts surveyed by Bloomberg News for profit of 1.78 billion euros.