European stocks climbed in the last week of 2011 as US data showed the recovery in the world’s largest economy is gathering pace and optimism grew that eurozone policy makers will contain the debt crisis.
The benchmark STOXX Europe 600 Index rose 1.1 percent to 244.54, the highest since Oct. 28. The second straight week of gains helped trim last year’s losses to 11 percent. The gauge has rallied 14 percent from a 2011 low on Sept. 22 as eurozone leaders planned to channel central-bank loans through the IMF to debt-ridden nations and the European Central Bank (ECB) took steps to ease a cash squeeze.
“There is a risk of losing sight that gradually progress has been made,” said William De Vijlder, global chief investment officer at Paris-based BNP Paribas Investment Partners. “The ECB has eased its policy. The firepower of the IMF is being increased.”
Post-Christmas trading was slow, with daily volume in the STOXX 600 this week dipping to 32 percent of this year’s average.
The STOXX 600 gained 5.6 percent from the start of the year to its peak on Feb. 17. From there, it tumbled 26 percent to its low on Sept. 22, entering a bear market. The gauge had its worst third quarter since 2002, dropping 17 percent, as US leaders wrangled over deficit cuts and European policymakers remained divided on their response to the debt crisis.
Banks had the biggest drop among 19 industry groups last year, sinking 32 percent, amid growing concern the fiscal crisis would force at least one nation to default on its debt.