European stocks advanced for a second consecutive week as earnings reports and economic data added to signs the global recession is nearing an end.
L’Oreal SA had its biggest weekly gain since September 2001 after reporting a smaller-than-estimated decline in earnings and forecasting a recovery. Natixis SA surged 49 percent after receiving a guarantee from its parent covering about 35 billion euros (US$50 billion) of risky assets and said it may return to profit this quarter. Volkswagen AG posted a fifth straight weekly drop, the longest losing streak since October 2005.
Europe’s Dow Jones STOXX 600 Index climbed 1.1 percent to 237.51. Economic reports this past week showed that the US economy contracted less than forecast in the second quarter, while consumer spending rose last month. European confidence in the economic outlook gained twice as much as forecast this month.
“We’ve had positive surprises from companies and the economy,” said Roland Lescure, who oversees about US$119 billion as chief investment officer of Groupama Asset Management in Paris. “Investors are chasing the bull market.”
The STOXX 600 has rallied 50 percent since March 9 as companies worldwide from Goldman Sachs Group Inc to Bayer AG and L’Oreal report better-than-projected earnings and investors speculate government measures and interest-rate cuts will help to pull the global economy out of a recession.
National benchmark indexes increased in all 18 western European markets. The UK’s FTSE 100 advanced 1.2 percent in the past week, while Germany’s DAX climbed 1 percent and France’s CAC 40 rallied 2.1 percent.
An index of executive and consumer sentiment in the 16 nations that use the euro climbed to the highest level since October, the European Commission in Brussels said on Friday. In Germany, business confidence rose more than economists forecast.
Net profits at western European companies that have reported results since July 8 beat projections by 16 percent, while dropping 38 percent on average, according to data compiled by Bloomberg. Analysts expect earnings in the STOXX 600 to grow 5.8 percent this year, estimates compiled by Bloomberg show.
Technology stocks rose 4.6 percent as a group, the biggest gain among 19 industries in the STOXX 600.
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