European stocks rose for a 10th week, extending the longest streak since January 2006, as companies reported better-than-expected earnings and speculation grew policymakers would do more to stimulate the economy.
The STOXX 600 increased 1.6 percent to 269.88 this week, even after falling 0.1 percent on Friday. The benchmark gauge has climbed 15 percent since June 4 as euro-area policymakers eased repayment terms for Spanish banks and optimism grew that central banks would introduce new stimulus measures.
“The earnings season hasn’t come in as bad as expected,” said Thomas Tilse, of Allianz Global Investors in Frankfurt. “On the liquidity side, basically the market has the assumption that the [US] Fed as well as the ECB [European Central Bank] and the Bank of England will be in coordinated action in loosening monetary policy further.”
European Central Bank President Mario Draghi said on Aug. 2 that the bank might take action to reduce debt yields for nations on Europe’s periphery, while stressing that the ECB must work “within its mandate to maintain price stability.”
German Chancellor Angela Merkel is “not worried” by Draghi’s announcement, spokesman Georg Streiter told reporters in Berlin on Monday, when asked whether the government was concerned that ECB independence might be compromised.
Italian Prime Minister Mario Monti warned of a potential breakup of the euro region without greater urgency in efforts to lower government borrowing costs.
In an interview with Germany’s Der Spiegel magazine published on Sunday last week, Monti said that disagreements within the 17-nation euro area are detracting from the policy response to the debt crisis.
Of the 247 companies listed on the STOXX 600 that have reported quarterly profit this earnings season, 124 have exceeded analysts’ projections, while 121 have missed them, according to data compiled by Bloomberg.
National benchmark indexes rose in all of the 18 western European markets, except Sweden. The UK’s FTSE 100 advanced 1 percent, while Germany’s DAX Index jumped 1.2 percent. France’s CAC 40 gained 1.8 percent.