European stocks advanced in the first week of the new year as economic reports from around the world added to optimism that the global economy can weather the fallout from the eurozone’s sovereign-debt crisis.
Eurasian Natural Resources Corp and Fiat SpA led gains in mining companies and carmakers, both climbing at least 11 percent. Banks limited gains as UniCredit SpA slumped 38 percent, its largest drop since at least 1989, after announcing that it would hold its planned rights offer at a discount.
The benchmark STOXX Europe 600 Index rose 1.2 percent to 247.53 in the first five trading days of this year for the benchmark measure’s third consecutive week of gains. The gauge has advanced 5.9 percent since Dec. 16 last year as US reports from manufacturing activity to durable-goods orders showed the economic recovery is gathering pace.
“The good news is that in the absence of a European meltdown, most of the global economy has been improving,” Russ Koesterich, the San Francisco-based global chief investment strategist at the iShares unit of BlackRock Inc, wrote in a note on Thursday. “The most recent measures indicate that growth in the US, other developed countries and emerging markets is stabilizing, albeit at a below-trend level.”
Reports in the past week showed that manufacturing in Germany, the US, China, India, Australia and the UK improved last month. Separate releases showed that private employers added 325,000 workers to payrolls, the biggest increase in records going back to 2001, while US Department of Labor figures on Friday showed the US jobless rate dropped to the lowest level since February 2009.
Concern that European banks would have to raise more capital tempered the STOXX 600’s weekly advance as Germany kicked off the year’s long-dated sovereign-debt auctions. Germany got bids for 5.14 billion euros (US$6.5 billion) of 10-year bunds, while Portugal sold 1 billion euros of three-month bills and France sold 4.02 billion euros of benchmark 10-year bonds. Greece, Italy and Spain will auction their own debt later this month.
National benchmark indices rose in 13 of the 18 Western European markets. France’s CAC 40 Index lost 0.7 percent, the UK’s FTSE 100 Index increased 1.5 percent and Germany’s DAX advanced 2.7 percent.