European equities advance on China, US economic data

POSITIVE SIGNS::The STOXX Europe 600 gained 3 percent on reports that US unemployment slid to 7.3 percent and Chinese output rose in August


Sun, Sep 08, 2013 - Page 15

European stocks posted their biggest weekly advance in more than four months as US unemployment remained at a four-year low and manufacturing growth in the world’s two largest economies beat projections.

Nokia Oyj surged 41 percent this week after Microsoft Corp agreed to buy its handset unit for 5.44 billion euros (US$7.2 billion) and brokers upgraded their ratings on the shares. Alcatel-Lucent SA rose 22 percent amid speculation Nokia could bid for its wireless business.

The STOXX Europe 600 Index gained 3 percent to 306.10 this week, its best weekly performance since April 26. The benchmark slipped 0.8 percent last month, the second monthly loss in more than a year. Still, it has rallied 26 percent from this year’s low on June 24, as the European Central Bank and the Bank of England pledged to keep interest rates low.

“All the latest data coming out of the US is quite encouraging,” David Hussey, head of European equities at Manulife Asset Management, said by phone from London. “The global economy is slowly healing, though we’re still nowhere near being given the all clear. The nub of it is whether the Fed will allow rates to appreciate more slowly, but the place to be will be in equities.”

The VSTOXX Index, a gauge of expected volatility in euro-area stocks based on options prices, slid 14 percent this week. National benchmark indices advanced in all of the 18 Western European markets except Iceland. Germany’s DAX and the UK’s FTSE 100 added 2.1 percent, while France’s CAC 40 gained 2.9 percent.

In the US, Labor Department figures showed the unemployment rate unexpectedly fell to 7.3 percent last month, the lowest since December 2008, even as employers added fewer workers than economists had projected.

And in China, an official measure of manufacturing activity rose to 51 last month from 50.3 in July, beating the median economist projection.