European stocks rose to a three-week high, completing their biggest weekly gain since April, as investors bet that any tapering of Federal Reserve stimulus will be more gradual than previously anticipated.
RWE AG and E.ON SE rallied as a study by a German government adviser fueled speculation of higher electricity prices. Sonova Holding AG, the world’s biggest maker of hearing aids, and Enel SpA, Italy’s biggest utility, each rallied at least 3.5 percent after UBS AG upgraded the shares. ProSiebenSat.1 Media AG dropped 1.1 percent as Telegraaf Media Groep NV sold its stake in the German broadcaster.
The Stoxx Europe 600 Index added 0.5 percent to 306.1 at the close of trading in London, after swinging between gains and losses at least 11 times. It rallied 3 percent this week, snapping two weeks of losses, as the European Central Bank affirmed its accommodative monetary policy and Chinese manufacturing in August surpassed estimates.
“Investors are thinking tapering will be gradual and not as steep as would be the case if payrolls data were stronger,” said Manish Singh, who helps oversee $2 billion as investment manager at Crossbridge Capital in London. “The Fed is looking to exit quantitative easing by mid-2014. The longer the Fed takes to start tapering, the less time it has to complete it and bigger the size of each installment. A small start in September seems more sensible and on track.”
Russian President Vladimir Putin told reporters after the Group of 20 summit that his country will help Syria if the U.S. attacks that country. Russia is already helping Syria with arms shipments, he said.
Earlier at the summit, Putin said he is doubtful of U.S. evidence that Syria deployed a chemical-weapons attack against its own citizens last month.
In the U.S., data showed that payrolls climbed at a slower-than-forecast pace in August, fueling speculation the Fed will not rush into large-scale trimming of bond purchases. The gain of 169,000 workers last month followed a revised 104,000 increase in July that was smaller than initially estimated, Labor Department figures showed in Washington. The median forecast of 96 economists surveyed by Bloomberg called for an August increase of 180,000. Still, unemployment dropped to 7.3 percent, the lowest since December 2008, as more people left the labor force.
National benchmark indexes rose in 14 of the 18 western European markets. The U.K.’s FTSE 100 added 0.2 percent, France’s CAC 40 climbed 1.1 percent and Germany’s DAX advanced 0.5 percent.
EON SE, Germany’s biggest utility, jumped 4.9 percent to 12.71 euros after a government adviser raised the possibility of limits on subsidies for renewable energy. Germany must adopt Sweden’s quota system for subsidies to contain rising costs of solar and wind-power generation, the Monopolkommission said in a study. The country currently offers uncapped subsidy payments to renewable-energy projects.
RWE, the second-biggest, surged 6.4 percent to 23.28 euros, its biggest jump since October 2011.
Sonova advanced 3.6 percent to 110 Swiss francs, its highest price since April 16. UBS raised its rating on the shares to buy from neutral, citing growth prospects in its hearing-implants business.
Enel SpA rallied 4.7 percent to 2.61 euros, its biggest gain in 13 months. UBS upgraded Enel to buy from neutral, saying the company’s plans to maximize free cash flow by reducing costs and capital expenditure may push up its price-to-earnings ratio by about 30 percent.
Ericsson AB added 3.5 percent to 86.55 kronor, its highest price since July 2011. Credit Suisse Group AG raised its recommendation on the shares to outperform, similar to buy, from neutral, saying the world’s largest maker of mobile-network equipment will benefit from accelerating growth in the wireless-infrastructure market.
Air France-KLM Group climbed 4 percent to 6.16 euros as the airline said the number of passengers increased 3 percent in August from a year earlier.
A gauge of travel and leisure companies advanced 0.5 percent. Thomas Cook Group Plc rallied 6.3 percent to 147.4 pence and EasyJet Plc added 1.5 percent to 1,255 pence.
ProSiebenSat.1 slid 1.1 percent to 30.78 euros after TMG said late yesterday sold its entire stake of 13.1 million shares, or about 6 percent, in the company to institutions. KKR & Co. and Permira Advisers LLP sold 25 million shares of ProSiebenSat.1 earlier this week.
Voestalpine AG slid 1.3 percent to 34.05 euros. Bank of America Corp.’s Merrill Lynch unit downgraded Austria’s biggest steelmaker to neutral from buy, citing a recent rally that has led to limited potential for a price increase. The stock gained 37 percent in the four months through August.
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