European stocks rise for third week

European benchmark stock indexes climbed for a third week in four, buoyed by optimism global economic and profit growth is picking up. AstraZeneca Plc, Swiss Reinsurance Co and SAP AG paced gains.

The Dow Jones Stoxx 50 Index increased 2.5 percent in the week, even as it slid 0.7 percent yesterday. The Stoxx 600 added 2.6 percent and the Euro Stoxx 50, a benchmark for the 12 countries sharing the euro, 2.3 percent in the past five days.

Positive news

Government and industry reports that showed manufacturing expanding worldwide and Europe's service industries growing at their fastest pace in more than a year helped propel benchmarks to their highest levels in nine months. The dollar on Wednesday reached a five-month high against the euro, boosting the value of US sales for companies that report in the common currency.

"Markets will continue to go up on positive economic news," said Yves Vaneerdewegh, who manages the equivalent of about US$117 million of European equities at Puilaetco SCS, a Belgian brokerage.

On Friday, benchmark indexes fell in 11 of the 17 Western European markets as the dollar pared gains against the euro for a second day. Germany's DAX index shed 1.7 percent and France's CAC 40 Index declined 0.5 percent. The UK's FTSE 100 Index gained 0.2 percent. September futures on the Euro Stoxx 50 slid 1.4 percent to 2608.

Stocks extended declines after a government report showed that the US unexpectedly lost 93,000 jobs in August, the most since March. Economists had forecast a rise of 20,000, based on the median of 64 forecasts in a Bloomberg News survey.

"Investors are taking a pause after some pretty good gains," Vaneerdewegh said.

The Stoxx 600's insurance group added 5.4 percent this week, the second-biggest gainer among the index's 18 industry designations.

Gerard Piasko, chief investment officer of private banking at Bank Julius Baer Holding AG, where he helps oversee $37 billion in assets, said he owns more insurance stocks than are represented in the MSCI Europe Index. They are still cheap compared with other industries, he said.

Swiss Re, the world's No. 2 reinsurance company, added 8.7 percent in the week to 93.5 Swiss francs. It earns about a third of its revenue in the U.S., according to Hoover's Inc. The company on Aug. 29 said first-half profit surged as premiums advanced and rising stock markets cut writedowns. Prudential Plc, a UK insurer that relied on North America for about 22 percent of annual sales in 2001, according to Hoover's, gained 8.4 percent to £4.73.

Drugmakers

The Stoxx 600 health index was the biggest gainer, adding 5.5 percent. Richard Davidson, head of Morgan Stanley's European strategists, advised clients to increase holdings of pharmaceutical, oil and retail stocks. Davidson's team was rated No. 1 in a survey by Institutional Investor magazine.

AstraZeneca, Europe's No. 2 drugmaker, climbed 9.1 percent to £26.50, poised to lead weekly gains on the Stoxx 50. On Monday, a study showed that the company's experimental blood-thinner Exanta combined with aspirin is more effective than aspirin alone in reducing complications in patients who suffered recent heart attacks.

Novartis AG, the region's third-largest pharmaceuticals company, rose 5.6 percent to 54.4 Swiss francs. The company on Tuesday said a study showed its Diovan heart drug cut the incidence of irregular heartbeat by 35 percent in heart failure patients who also took standard treatments for the condition.

Elan

Elan Corp, the Irish drugmaker whose accounting is being investigated by US regulators, surged 38 percent since Aug. 29 to 5.4 euros, on course to outpace all others shares on the Stoxx 600.

The company filed its annual report on Thursday, beating a deadline that might have led to a default on as much as US$2 billion in debt. Elan couldn't pay back debts if they were called in, chief executive officer Kelly Martin said.

Computer-related companies advanced, lifted by investor expectations that companies are set to upgrade to newer computers and software.

Intel Corp., the world's biggest semiconductor maker, on Thursday raised its third-quarter sales forecast for the second time in two weeks, reinforcing gains earlier in the week after Morgan Stanley and Goldman, Sachs & Co upgraded the industry.