European stocks rose for the first time in three weeks after a report showed the US economy expanded more than previously estimated last quarter and concerns eased that banks need more capital.
CRH PLC, the world’s second-biggest maker and distributor of building materials, paced an advance among companies that depend on sales in North America. Credit Agricole SA led banks higher as it said a key measure of financial strength held steady. Royal BAM Groep NV, the largest Dutch construction company, rallied 13 percent after posting second-quarter earnings that beat analysts’ estimates and raising its profit forecast.
Europe’s Dow Jones STOXX 600 Index added 1.5 percent this week to 288.18, bringing the gain for this month to 1.6 percent. The measure is still down 21 percent this year as asset writedowns and credit losses at banks topped US$500 billion worldwide, threatening to push the US economy into recession.
“Investors seem to be relieved that the worst-case scenario for the US economy so far hasn’t come true,” said Carsten Klude, an investment strategist at M.M. Warburg & Co in Hamburg, which has the equivalent of US$25 billion. “The GDP data triggered a stocks rally.”
National benchmark indexes advanced in all 18 western European markets this week, except Greece and Iceland. France’s CAC 40 gained 1.9 percent. The UK’s FTSE 100 added 2.4 percent, while Germany’s DAX climbed 1.3 percent.
The US economy grew at a 3.3 percent annual rate in the second quarter, surpassing last month’s estimate of 1.9 percent, the US Commerce Department said on Thursday.
Record exports and a smaller decline in inventories helped boost growth. Economists had predicted a 2.7 percent rate, according to the median estimate in a Bloomberg News survey.
“The US data supported the market, implying that the world’s largest economy may not fall into as deep a recession as some investors feared,” Thomas Koerfgen, a money manager at SEB Asset Management in Frankfurt, said in a Bloomberg Television interview.
Gains in the STOXX 600 were limited by carmakers including Renault SA and Bayerische Motoren Werke AG as crude climbed above US$117 a barrel. Oil producers evacuated rigs before the arrival of Gustav, forecast to be the largest hurricane in the Gulf of Mexico since Katrina.
CRH increased 4.6 percent. The company gets about 49 percent of its revenue in the Americas, Bloomberg data show.
The STOXX 600 Banks Index is down 30 percent this year, the worst performance among 18 industry groups, as financial firms worldwide raised more than US$353 billion to replenish capital. Analysts estimate banks’ earnings will decline 24 percent this year, according to data compiled by Bloomberg News.