European Stocks Gain on BNP Paribas Earnings.

The BNP Paribas logo hangs outside one of the bank's offices in Paris, last year. 

European stocks rose, rebounding from a two-month low, as earnings from BNP Paribas SA and Swiss Reinsurance Co. overshadowed concern that government debt may harm the economic recovery. U.S. index futures gained.
BNP Paribas, France’s largest bank, climbed 3.4 percent and Swiss Re, the world’s second-biggest reinsurer, rallied 4.9 percent. Nokian Renkaat Oyj led auto-related shares higher as the tiremaker posted better-than-estimated net income. Alcatel- Lucent SA tumbled 5.8 percent after its net loss more than doubled analysts’ estimates.
The Stoxx Europe 600 Index rose 0.6 percent to 252.1 at 11:36 a.m. in London, after earlier falling as much as 1 percent. The gauge has retreated 7.4 percent from this year’s high on April 15 amid speculation that a 110 billion-euro ($140 billion) rescue package for Greece will need to be extended to Spain and Portugal.
“While there is plenty of reason for concern, most European countries are a long way away from junk status and we are experiencing a recovery in GDP growth,” London-based UBS AG strategists Karen Olney and Nick Nelson wrote in a report to clients today. “We think this is a good backdrop for buy opportunities in Europe, especially for companies which benefit from a weaker euro.”
Stocks extended gains after a report showed German factory orders surged more than economists forecast in March on demand for investment and consumer goods at home and abroad.

U.S., Asian Shares:
Futures on the Standard & Poor’s 500 Index expiring in June advanced 0.4 percent today before a report on jobless claims. The MCSI Asia Pacific Index slumped 2.4 percent, erasing this year’s gains.
The European Central Bank’s Governing Council is meeting today in Lisbon, the latest capital to be hit by the fiscal meltdown that’s shaking the foundations of Europe’s monetary union. All 58 economists in a Bloomberg News survey expect the ECB to leave its benchmark interest rate at a record low of 1 percent today. It is due to announce the decision at 12:45 p.m. local time and ECB President Jean-Claude Trichet holds a press conference 45 minutes later.
The “ECB meeting is interesting not for the rate decision but for what will be said this afternoon at the press conference,” said Stephen Pope, London-based chief global equity strategist at Cantor Fitzgerald. “So far, even with the greatest respect, the ECB and Mr Trichet have not been very impressive. How could he say the euro is intact and there is no contagion risk?”

U.K. Election:
The U.K.’s FTSE 100 Index rose 0.3 percent today as the country votes in an election that polls show may produce no parliamentary majority for the first time since 1974.
Europe’s biggest fund managers say the highest volatility since July makes investing in the region too dangerous even as shares are trading at a 13 percent discount to global stocks.
“We’re not buyers,” said Romain Boscher, head of equities at Groupama Asset Management in Paris, which oversees $120 billion. “If you have a one-year vision, it’s time to buy, but if your vision is one month, it’s too early. Volatility will remain very strong. The market risks reaching lower points.”
Trading of bearish options on an exchange-traded fund tracking European stocks surged to a record yesterday after a single transaction betting on a 12 percent drop by July.
BNP Paribas rallied 3.4 percent to 49.42 euros after posting first-quarter net income of 2.28 billion euros. That beat the 1.63 billion-euro median estimate of 11 analysts surveyed by Bloomberg.

Commerzbank, Swiss Re:
Germany’s Commerzbank AG climbed 3.6 percent to 5.93 euros after Germany’s second-largest bank reported its first profit in seven quarters as trading results rebounded. Net income in the three months to March 31 totaled 708 million euros, beating the 479 million-euro median estimate of analysts surveyed by Bloomberg.
Swiss Re surged 4.9 percent to 46.78 Swiss francs. The company reported a 22 percent increase in first-quarter profit to $158 million as higher investment income countered claims from the Chile earthquake and European winter storm Xynthia. Analysts had estimated net income of $139 million, according to a Bloomberg Survey.
Nokian Renkaat climbed 7 percent to 18.62 euros after the Nordic region’s biggest tiremaker posted first-quarter net income of 20.1 million euros, beating analysts’ median estimate of 10.5 million euros.

Pirelli, BMW:
Pirelli & C. SpA, Europe’s third-largest tiremaker, climbed 3.2 percent to 44.1 cents and Bayerische Motoren Werke AG, the biggest maker of luxury cars, gained 3 percent to 37.07 euros.
Alcatel, the largest French telecommunications equipment producer, plunged 5.8 percent to 2.13 euros after its first- quarter net loss widened to 515 million euros from 402 million euros in the year-earlier period. Analysts had predicted a loss of 244.4 million euros, according to a Bloomberg survey.
 Axa SA lost 2.3 percent to 13.17 euros, a fifth day of declines. Europe’s second-biggest insurer by market value today reported first-quarter revenue of 27.9 billion euros, compared with analysts’ median estimate of 28.2 billion-euro.
Life and savings new business value, a measure of the present value of future profits expected from long-term life or pension policies, rose 35 percent to 317 million euros. That missed analysts’ estimate of 336 million euros.
William Morrison Supermarkets Plc slid 1.3 percent to 275.1 pence after the smallest of the U.K.’s four main grocers reported a slowdown in sales growth.

Morrison Sales:
Sales at stores open at least a year rose 0.8 percent, excluding fuel and value-added tax, in the 13 weeks ended May 2. That missed the 2 percent median estimate of six analysts surveyed by Bloomberg News.
A U.S. Labor Department report at 8:30 a.m. in Washington may show initial claims for jobless benefits fell by 8,000 last week to 440,000, according to a Bloomberg survey of economists. The April non-farm payrolls report is scheduled for release tomorrow.
A separate report today may show the productivity of U.S. workers probably rose in the first quarter at the slowest pace in a year as employers took on staff to meet growing demand.