European stocks climbed for a third week to their highest since 2008, amid merger and acquisition (M&A) activity and as US payrolls and manufacturing data increased optimism that the world’s largest economy is strengthening.
Metso soared 20 percent after The Weir Group proposed a merger with the Finnish maker of rock crushers. Holcim Ltd rallied 11 percent and Lafarge SA rose 13 percent after the world’s largest cement makers confirmed they are discussing a merger of equals. Alstom gained 14 percent after agreeing to sell a unit.
The STOXX Europe 600 Index increased 1.6 percent to 339.18 this week, posting its longest daily winning streak since October. It has advanced 4.6 percent since March 24, as improving US economic data signaled that the world’s largest economy is recovering from the harsh winter.
“A sustained economic recovery gave stock markets support this week,” said Christian Gattiker, the head of research at Julius Baer Group Ltd in Zurich. “The new quarter has begun, too, where many investors take new positions. Compared with the end of March, sentiment has stabilized. There’s more room to the upside in the new quarter before the ‘sell in May’ worries may dampen the momentum in stocks.”
European Central Bank President Mario Draghi on Thursday said policymakers could turn to asset purchases to prevent a prolonged period of low inflation. The central bank discussed quantitative easing among a range of measures as it left its benchmark interest rate unchanged at a record low 0.25 percent.
Benchmark indices climbed in all of the 18 Western European markets tracked by Bloomberg this week, except Greece. Germany’s DAX gained 1.1 percent, the UK’s FTSE 100 rose 1.2 percent and France’s CAC 40 advanced 1.7 percent.