European stocks climbed for a seventh straight week, the longest winning streak in more than six years, as better-than-expected earnings offset concern that the euro area crisis is deepening.
The STOXX Europe 600 Index climbed 0.8 percent to 258.17 this week, for the longest stretch of gains since January 2006, even after falling 1.4 percent on Friday. The gauge has rebounded 10 percent from this year’s low on June 4 as central banks from Europe to China eased monetary policy to help spur economic growth.
“Investors have been given the rare opportunity to focus on companies as the earnings reporting season continued to filter through,” said Simon Reynolds, a fund manager at Octopus Investments in London. “Upbeat US earnings have helped lift equity markets.”
Of the 46 companies on the STOXX 600 that have reported earnings this quarter, 48 percent beat forecasts, according to data compiled by Bloomberg. On the Standard & Poor’s 500 Index, 73 percent of the 118 companies that have reported quarterly earnings have topped analyst estimates, the data show.
National benchmark indexes rose in 11 of the 18 western European markets this week. Germany’s DAX rallied 1.1 percent, France’s CAC 40 advanced 0.4 percent and Switzerland’s SMI gained 1.7 percent. The UK’s FTSE 100 lost 0.3 percent, while Spain’s IBEX 35 fell 6.3 percent and Italy’s FTSE MIB retreated 4.7 percent.
European stocks dropped on Friday, paring their weekly advance, as the yield premium for Spanish benchmark bonds over German bunds surged to a record. Spanish bonds declined, pushing the extra yield investors demand to hold the nation’s 10-year securities instead of similar-maturity German bunds to the most on record.
Spain’s recession will extend into next year as the region of Valencia prepared to seek a rescue from the central government and European finance ministers approved the bailout of Spanish banks, Spanish Budget Minister Cristobal Montoro said after the Cabinet met on Friday in Madrid. GDP will fall 0.5 percent next year instead of rising 0.2 percent as the government predicted on April 27, Montoro said.
ASML surged 9.7 percent after the chipmaker said second- quarter net bookings climbed 9.8 percent and that technological advances will boost business in the longer term.
Akzo Nobel jumped 10 percent. The company reported second-quarter earnings ahead of analyst forecasts as chief executive officer Ton Buechner drives ahead with a revamp to improve profitability.
SEB, the second-largest lender in the Baltic countries, and Nordea Bank AB, the Nordic region’s biggest bank, also reported earnings that topped analysts’ estimates. The shares gained 8 percent and 2.1 percent respectively.
Remy Cointreau SA increased 6.1 percent in Paris as France’s second-biggest distiller reported an increase in first-quarter sales that also topped projections.
CSR PLC surged 37 percent after Samsung Electronics Co agreed to buy its wireless technology unit for US$310 million.