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Europe stocks rally on U.S. budget deal progress

Earnings Wall

Meanwhile, the White House said President Barack Obama will meet with House Democratic leaders at 3:15 p.m. Eastern. U.S. stocks rose on Monday , but traded lower on Tuesday . Asia markets closed mostly higher . German ZEW data German data further provided investors with a reason to celebrate. The ZEW sentiment survey showed that the economic expectations indicator rose further above its long-term average in October, to 52.8 points from 49.6 points in Septemberbeating economists expectations for an unchanged reading. Germanys DAX 30 index /quotes/zigman/2380246 DX:DAX -0.20% jumped 0.9% to 8,804.44, for the highest closing level on record. The U.K.s FTSE 100 index /quotes/zigman/3173262 UK:UKX -0.49% picked up 0.6% to 6,549.11, while Frances CAC 40 index /quotes/zigman/3173214 FR:PX1 -0.75% rose 0.8% to 4,256.02. Morgan Cazenove lifted the equipment-rental company to overweight from neutral. Man Group PLC /quotes/zigman/12639690 UK:EMG -2.09% rallied 6.4% after UBS added the investment firm to its most-preferred list. In the same vein, UBS added Schroders PLC /quotes/zigman/257601 UK:SDR -1.16% to its least-preferred list, sending the shares 0.3% lower. Morgan Cazenove upgraded the firm to neutral from underweight. Stora Enso Oyj /quotes/zigman/125372 FI:STERV -0.07% climbed 5% after Goldman Sachs lifted the pulp and paper firm to buy from neutral.

Europe’s car market grows in September from record low levels

Credit: Reuters/Francois Lenoir LUXEMBOURG | Tue Oct 15, 2013 9:46am EDT LUXEMBOURG (Reuters) – Spain will probably bring an end to the programme of international aid for its banks on schedule this year, Economy Minister Luis de Guindos told a news conference in Luxembourg on Tuesday. Madrid turned to Europe last year for 41 billion euros ($56 billion) to help the weakest of its banks, which have been crippled by the collapse of its real estate market and resulting mass of failed loans to developers and houseowners. With the economic fortunes of Europe’s debt-ridden southern half showing signs of improving, a senior official in Brussels told Reuters last week that Spain was unlikely to seek more financial aid for the banks when the current programme runs out. “The central scenario, and the most probable one, is that on November 15 (it will be decided that) Spain’s banking programme will come to a close,” de Guindos told reporters at a meeting of European Union finance ministers. The European Central Bank and the European Commission, which backed the rescue, last month said in a review of Spanish banking reforms that the sector remained comfortably solvent, and praised its turnaround. They stressed, however, that Spain’s weak economy – set to emerge from a two-year recession by the end of the year – and a fall-off in lending still posed a risk. Like their European peers, Spanish banks also face a European review of their balance sheets early next year before the ECB takes over as supervisor. Some believe their restructured or refinanced loans could come under particular scrutiny, and that they could be told to put more cash aside to counter potential losses on these, banking sources in Madrid have said. Any capital gap that that process leaves is likely to be manageable, though smaller banks that are owned by the state are unlikely to be able to turn to the market like some of their peers. The Spanish government currently estimates that lenders will have to put aside an extra 5 billion euros in provisions to counter such losses, a source at the Economy Ministry said. “The general perception is that in Europe the banking system has not been as thoroughly cleaned up as in the United States …

“The sales, however, continue to be artificially boosted by huge discounts and self-registrations by dealers,” he added, warning it would take at least two years before the market was strong enough to grow on its own without the aid of incentives. In a sign of recovery on the ailing euro zone periphery, car demand in Greece, Ireland and Portugal – which all accepted bailouts during the crisis – jumped by double-digit rates. “The western European auto market continued on its course to recovery in September,” said the German auto industry association VDA. For the first nine months, the ACEA said registrations in Europe still fell 4 percent to 9.33 million new cars on the back of weak demand in Germany, Italy and France but also in the Netherlands, where sales have plummeted 29 percent year-to-date. September volumes are a better gauge of underlying trends in demand than August, since the latter’s results are artificially depressed given many European car buyers are on holiday. It is also a crucial time for the UK market, since it accounts for about 18 percent of annual volumes. Sales grew by 12 percent to over 400,000 vehicles in September, the sixth month in a row where they expanded at a double digit rate. The biggest winner in September was Renault (PAR:RNO), which increased sales 17 percent at its flagship brand while its low-cost Romanian badge Dacia saw volumes leap by 40 percent. Germany’s Daimler (GER:DAI) posted a strong month as well, with sales of its Mercedes-Benz luxury brand increasing nearly 14 percent after the French government was forced to end its sales ban of certain vehicles. Volvo (GEELY.UL) reported a surprisingly strong gain of 13 percent to help its otherwise weak performance so far this year, while brands heavily dependent on the dismal Italian market like Fiat’s (MIL:F) Lancia and Alfa Romeo brands continued to see volumes fall at a double-digit rate. Japanese carmakers Toyota , Mazda , Suzuki and Mitsubishi (TYO:7211) also all managed to grow volumes last month, helped by a soft yen, new smaller diesel engines in their line-up and new models tailored to European tastes.