Bloomberg News

European Stocks Climb, Extending Biggest Weekly Surge in a Year

July 01, 2011

July 1 (Bloomberg) -- European stocks advanced for a fifth day, pushing the benchmark Stoxx Europe 600 Index to the biggest weekly rally in a year, as U.S. manufacturing growth exceeded economists’ forecasts.

Vestas Wind Systems A/S surged 7.1 percent after EDF Energies Nouvelles SA agreed to use its turbines for at least half of its land-based wind farms in Europe. ProSiebenSat.1 Media AG gained 5.7 percent as the broadcaster said its second- quarter results were probably better than predicted. Commerzbank AG, Germany’s second-largest lender, surged 6.1 percent as a measure of banks climbed the most since January.

The Stoxx 600 advanced 0.8 percent to 274.92 at the 4:30 p.m. close in London. The measure has soared 4.1 percent this week, the most since July last year, as the Greek Parliament supported Prime Minister George Papandreou’s 78-billion euro ($113 billion) austerity package in order to obtain further European Union financial assistance.

“The U.S. manufacturing report has beaten the consensus, giving a positive signal to the market on the health of the U.S. economy,” said John Plassard, director at Geneva-based Louis Capital Markets. “We may also have seen fund managers buying back stock to cover short positions now some concerns have eased over the Greek debt situation.”

National benchmark indexes gained in all of the 18 western European markets. Germany’s DAX and France’s CAC 40 rose 0.6 percent. The U.K.’s FTSE 100 climbed 0.7 percent.

VStoxx Slides

The VStoxx Index, a measure of the cost of insuring against losses in the Euro Stoxx 50 Index, fell 8.5 percent to the lowest level in two months.

The Institute for Supply Management’s factory index unexpectedly rose to 55.3 in June from 53.5 the prior month, the Tempe, Arizona-based group said today. Economists had projected the U.S. manufacturing gauge would drop to 52, according to the median forecast in a Bloomberg News survey.

Greece may receive as much as 85 billion euros in new financing, including a contribution from private investors, in a second bailout aimed at preventing the country from a default, according to an Austrian Finance Ministry official. EU finance chiefs are holding a conference call tomorrow to free up a 12 billion-euro tranche from last year’s 110 billion-euro bailout.

Asian Economy

In Japan, the quarterly Tankan index of sentiment at large manufacturers showed companies plan to increase hiring and investment as demand rebounds this year from the March earthquake. A Chinese manufacturing index fell to the lowest level since February 2009, signaling that the world’s second- biggest economy is cooling as export demand weakens and the government reins in credit to control inflation.

“This morning’s Chinese PMI made investors think it wasn’t all fun after two days of substantial gains,” said Morten Kongshaug, chief equity strategist at Danske Bank in Copenhagen. “It’ll be three, four months before Greece could become an issue again, so it’s all about getting into the market as money is made. Worries about earnings and industrial output will make the market stall soon.”

Vestas jumped 7.1 percent to 128 kroner after saying EDF Energies Nouvelles, a French renewable energy developer, may buy as much as 2,000 megawatts of turbines under an agreement that covers deliveries from 2012 to 2014.

ProSiebenSat.1 climbed 5.7 percent to 20.66 euros, the largest increase in six months. Chief Executive Officer Thomas Ebeling said Germany’s biggest private broadcaster probably had a “better” second quarter than previously predicted.

Banks Rally

Commerzbank rallied 6.1 percent to 3.15 euros for the biggest gain in the DAX. Lloyds Banking Group Plc, Britain’s largest mortgage lender, climbed 3.7 percent to 50.81 pence after UniCredit SpA upgraded the bank to “hold” from “sell” and BofA Merrill Lynch Global Research recommended that investors buy the stock, saying the bank’s new targets help form “earnings power.” That brought the stock’s weekly gain to more than 17 percent.

Greek banks gained as three of the country’s biggest lenders jumped more than 5 percent. EFG Eurobank Ergasias SA soared 7.4 percent to 3.47 euros, Alpha Bank SA rose 5.2 percent to 3.65 euros and National Bank of Greece SA climbed 5.5 percent to 5.20 euros.

UBS AG, the biggest Swiss bank, increased 2.4 percent to 15.69 francs after saying it plans to appoint former Bundesbank president Axel Weber as chairman. Italy’s Banca Popolare di Milano Scrl rallied 7.9 percent to 1.76 euros for the biggest increase in the Stoxx 600.

CGGVeritas declined 1.1 percent to 25.12 euros after Goldman Sachs Group Inc. downgraded the seismic surveyor of oilfields to “neutral” from “buy.”

ThyssenKrupp AG fell 1.6 percent to 35.28 euros as Germany’s largest steelmaker said it had stopped talks with Abu Dhabi MAR about the U.A.E. company buying its shipbuilding business.

--With assistance from Adria Cimino in Paris and Giles Broom in Zurich. Editors: Andrew Rummer, Will Hadfield

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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