European Stocks Advance; Siemens, Porsche, Nordea Pace Gains

Sept. 27 (Bloomberg) -- European stocks climbed for a second day after a report showed U.S. home sales declined, giving the Federal Reserve more reason to cut interest rates.

Siemens AG, the region's largest engineering company, and Porsche AG, the maker of the 911 Carrera and Boxster sports cars, led gains by companies dependent on the U.S. for earnings. Nordea Bank AB jumped the most in more than four years after a report said SEB AB plans to buy the Swedish state's 19.9 percent stake in the bank.

``The data fits into the view that the Fed will go on cutting interest rates,'' said Herbert Perus, who helps oversee the equivalent of $57 billion as head of global equities at Raiffeisen Capital Management in Vienna. ``We expect the Fed to cut its benchmark rate by half a percentage point this year.''

The Dow Jones Stoxx 600 Index added 0.8 percent to 377.96. All 18 industry groups advanced except for health-care stocks. The Stoxx 50 gained 0.7 percent, and the Euro Stoxx 50, a measure for the euro region, rose 0.6 percent.

Sales of new homes in the U.S. declined more than forecast in August, and prices tumbled by the most in almost four decades. The dollar traded near a record low on speculation rates will fall further. The Fed cut its benchmark rate by half a percentage point on Sept. 18.

Purchases of homes decreased 8.3 percent to an annual pace of 795,000, the lowest level in more than seven years, from a revised 867,000 rate in July, the Commerce Department said today. Economists forecast sales would fall to 825,000. The median price dropped 7.5 percent from August 2006, the most since 1970.

`More Positive'

``The economic data we are seeing suggests another rate cut is on the cards,'' said Espen Furnes, who helps manage the equivalent of $7.1 billion at Storebrand Asset Management in Oslo. ``Investors are more positive.''

The risk of owning European corporate bonds declined, according to traders of credit-default swaps.

National benchmarks increased in all 18 western European markets except Greece and Italy. France's CAC 40 rose 0.8 percent, as did the U.K.'s FTSE 100. Germany's DAX gained 0.6 percent.

``I feel very optimistic about global equity markets,'' said James Bevan, who helps manage $10 billion as chief investment officer for CCLA Investment Management in London. ``Companies are generating enormous internal rates of return.

Siemens rose 1.9 percent to 96.23 euros and Porsche increased 1.2 percent to 1,494.59 euros. The U.S. accounted for about a fifth of Siemens's revenue last year, and made up about one third of sales for the carmaker.

DSM, Havas

Nordea jumped 7.8 percent to 110.9 kronor, the steepest gain since Aug. 2003. SEB plans to offer 138 kronor for each Nordea share, or about 71 billion kronor ($10.9 billion) in total, Swedish business daily Dagens Industri reported today, citing two unidentified people familiar with the plan.

``It is a rumor and our policy is never to comment on rumors,'' SEB spokeswoman Katja Margell said in a telephone interview today. Nordea spokesman Boo Ehlin also declined to comment.

Royal DSM NV gained 3.8 percent to 38.11 euros after the world's biggest maker of vitamins raised its profit forecast for this year and announced a share buyback.

Havas SA rallied 6.1 percent to 4.19 euros. The owner of the Euro RSCG Worldwide advertising agency said first-half profit increased 67 percent, lifted by new contracts, including an advertising deal with Dell Inc.

Cie. de Saint-Gobain SA advanced 5.2 percent to 73.09 euros. Wendel, an investment firm, said it owns a 6 percent stake in Europe's biggest supplier of building materials. Wendel's stake gives it 5 percent of Saint-Gobain's voting rights.

Northern Rock

Northern Rock Plc climbed 6.3 percent to 193.5 pence. The Daily Telegraph reported that J.C. Flowers & Co. has been given access to the U.K. mortgage lender's books after making a takeover proposal for the bank. Flowers may be the only approach that might keep the U.K. bank as one entity, the Telegraph said, without saying where it got the information.

SLM Corp., the largest U.S. student-loan company, said it would press J.C. Flowers to complete its $25.3 billion takeover under the original terms.

Escada AG, whose luxury women's fashions cost as much as $7,000, fell 6 percent to 24.60 euros after reporting a third- quarter loss and reducing its sales forecast.

Berenberg Bank, Germany's oldest private bank, cut its price estimate on the stock by 25 percent to 30 euros.