European stocks rose for a third week as better-than-estimated earnings from Barclays PLC to Cap Gemini SA overshadowed concern about accelerating inflation and a worsening political crisis in the Middle East.
Barclays rallied 5.9 percent, while Cap Gemini gained 8 percent. Greek banks surged after National Bank of Greece SA made an offer to buy Alpha Bank AE.
The STOXX Europe 600 Index advanced 1.1 percent for its longest stretch of weekly gains this year. The gauge reached its highest level since August 2008 on Thursday and has advanced 5.5 percent since the start of this year.
Even so, rising profits have held the gauge at about 15 times the reported earnings of its companies, less than the average for the past year, according to data compiled by Bloomberg.
“Earnings are supporting equities,” said Arnaud Scarpaci, a fund manager at Paris-based Agilis Gestion, which oversees about US$109 million. “Fundamentals are being taken more into account than the macro economy.”
About 61 percent of STOXX 600 companies that have reported annual profit since Jan. 10 have topped analysts’ estimates for per-share profit, according to data compiled by Bloomberg.
Stocks pared some of the week’s gains yesterday after China’s central bank raised reserve requirements for lenders as Chinese Premier Wen Jiabao (溫家寶) tackles accelerating inflation and the risk of asset bubbles in the fastest-growing major economy.
The move came as European Central Bank Executive Board member Lorenzo Bini Smaghi said the bank might need to raise interest rates as global inflation pressures mount.
National benchmark indices rose in 14 of Europe’s 18 western markets. France’s CAC 40 index gained 1.4 percent, the UK’s FTSE 100 Index rose 0.3 percent, while Germany’s DAX index advanced 0.8 percent.
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Meanwhile, Deutsche Boerse lost 6.7 percent. The operator of the Frankfurt Stock Exchange agreed to buy New York Stock Exchange parent NYSE Euronext for US$9.53 billion, creating the world’s largest owner of equities and derivatives markets.
The merger will likely face an in-depth review by EU antitrust regulators, lawyers said.
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