European stocks rose for a third week as Greece formed a coalition government of parties prepared to abide by the terms of the country’s two bailouts, increasing optimism that the nation will remain in the euro.
The Stoxx Europe 600 Index added 1 percent to 246.58 last week, completing its longest stretch of weekly gains since January. The gauge retreated 0.7 percent on Friday as a measure of German business confidence slid to its lowest level in more than two years. The equity benchmark has risen 5.4 percent from this year’s low on June 4, giving it a valuation of 10.3 times estimated earnings, according to data compiled by Bloomberg.
Antonis Samaras, leader of Greece’s New Democracy party, became Greek prime minister on Wednesday after agreeing to form a coalition with the Socialist Pasok party and the Democratic Left. New Democracy won last Sunday’s election.
Spain sold more debt than it had planned in two separate auctions last week. The country sold 2.2 billion euros (US$2.8 billion) of bonds on Thursday, compared with its maximum target of 2 billion euros, and 3.04 billion euros of notes on Tuesday. That exceeded the 3 billion-euro maximum target that the government had set for the auction. Yields on Spain’s benchmark 10-year securities retreated to 6.38 percent after surging to a euro-era record of 7.29 percent on Monday.
In Germany, the Ifo Institute’s business-climate index dropped more than economists had estimated. The gauge, based on a survey of 7,000 executives, slipped to 105.3 this month from 106.9 last month, its lowest reading since March 2010. Economists had predicted a decline to 105.6, according to the median of 39 estimates in a Bloomberg News survey.