European stocks posted a second weekly advance, with the benchmark index reaching a six-year high, as mining companies rallied and the World Bank’s upgrade of global-growth forecasts offset concern over valuations.
PSA Peugeot Citroen led gains, completing its biggest weekly increase in eight months, while Rio Tinto Group helped a gauge of commodity producers surge the most in two years after Citigroup Inc made a bullish case for the industry and Deutsche Bank AG climbed 6.8 percent to track European lenders higher as an international supervisory group eased minimum-capital norms.
On the losing side this week was Ashmore Group PLC, which fell 13 percent after clients pulled US$3.5 billion from the emerging markets money manager.
The STOXX Europe 600 Index rose 1.8 percent to 335.82 this week.
The measure has added 2.3 percent since the start of the year after posting a 17 percent rally last year, as regional central banks pledged continued support for the economic recovery. That sent the gauge’s price-to-earnings ratio — based on its members’ estimated earnings — to 14.1, above the five-year average of 12.1.
“The World Bank’s growth forecasts were the first trigger which made markets such as Germany jump to new highs,” said Soeren Steinert, associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, Germany. “Investors not wishing to miss out on ongoing gains were squeezed back into the market.”
National benchmark indices rose in 16 of western Europe’s 18 markets this week. The UK’s FTSE 100 gained 1.3 percent, the DAX advanced 2.9 percent in Berlin to post the best performance among the developed markets tracked by Bloomberg and France’s CAC 40 increased 1.8 percent.
The World Bank raised its global growth forecasts after predicting that the economy will expand 3.2 percent this year. That is higher than the 3 percent it projected in June last year.
The Washington-based lender raised its growth estimate for the richest nations to 2.2 percent from 2 percent, with part of the increase reflecting improvement in the 18-country eurozone.
Earnings for companies in the STOXX 600 are set to climb 13 percent this year after dropping 5.3 percent last year, according to analysts’ estimates compiled by Bloomberg.
The average daily volume this week on the STOXX 600 across all exchanges was 12 percent higher than the average recorded over the past 12 months, data compiled by Bloomberg show.
Expected volatility on the Euro STOXX 50 Index based on options prices fell to the lowest level in four weeks.