European stocks rose for a second week as US consumer spending gained, business activity and factory orders topped forecasts and US Federal Reserve minutes showed some policy makers wanted to add to stimulus measures.
The market pared its weekly gain on Friday as data showing no growth in US jobs spurred concern that the world’s largest economy won’t help offset weakness caused by Europe’s sovereign- debt crisis.
Hargreaves Lansdown PLC rose the most this week in the Stoxx Europe 600 Index, soaring 24 percent, after profit increased. Bouygues SA surged 15 percent after announcing a stock buyback and raising its full-year sales forecast.
Eiffage SA sank 13 percent after earnings missed estimates.
The STOXX 600 climbed 3.4 percent this week, the most in two months, after slumping 2.4 percent yesterday.
The gauge still posted the biggest monthly decline last month since October 2008, falling 10 percent, amid concern the economic recovery is weakening.
The retreat has left the Stoxx 600 trading at 9.7 percent the estimated earnings of its constituent companies, near the lowest valuation since March 2009.
“European equities look very cheap compared with bonds and one must make extremely negative assumptions to arrive at a different conclusion,” said Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GMBH, which oversees about US$22 billion.
“Regarding macro-economic data, we’re seeing a discrepancy between the hard data that looks encouraging and soft data, based on surveys, that is disappointing. The question is which one is right? One important thing in the coming weeks will be to see whether sentiment-based indicators are improving,” he said.
The STOXX 600 pared some of its weekly advance after a report showed that the US economy added no jobs last month and the unemployment rate held at 9.1 percent.
Payrolls were unchanged last month, their weakest reading since September last year, after an 85,000 gain in July that was less than initially estimated, according to a US Labor Department release. The median forecast in a Bloomberg News survey called for an increase of 68,000 in August.
European sovereign default risk rose to a record after the report, which added to signs that the global economic recovery is weakening.
The Markit iTraxx SovX Western Europe Index of credit-default swaps insuring the debt of 15 governments rose 11 basis points to 310, surpassing an all-time high closing price of 308 on Aug. 26.
Swaps tied to Italian debt jumped 15 basis points to 400, topping last month’s record closing price of 391, according to CMA.
National benchmark indexes gained in all of the 18 western European markets. France’s CAC 40 Index rose 2 percent, the UK’s FTSE 100 Index added 3.1 percent and Germany’s DAX Index advanced less than 0.1 percent.
Greece’s ASE Index rose 1.3 percent, its first weekly gain in six weeks.