European stocks surged this week as US-led forces unleashed an assault on Iraq to disarm and remove the regime of Saddam Hussein.
The Dow Jones Stoxx 50 and Stoxx 600 indexes had their biggest weekly gains in 18 months as the price of oil plunged.
Chemical producers such as BASF AG, airlines including British Airways Plc and other companies that stand to benefit from a drop in oil prices led the advance.
"With the decline in oil prices, the prospect of an economic recovery is improving," said Ruben Mikkers, who helps oversee the equivalent of US$10.5 billion in European equities at Robeco Groep NV in Rotterdam. "Lower oil prices are good for everybody that uses oil as a fuel. It's good for equities in general."
The Stoxx 50 yesterday climbed 3.7 percent to 2308.29, taking its gain for the week to 8.5 percent. The Stoxx 600 added 3.3 percent and is up 7.7 percent since last Friday's close. Both had their largest weekly advances since the end of September 2001.
Germany's DAX on Friday jumped 4.2 percent, taking its five-day rise to 13 percent and making it the best performer among the 76 global markets tracked by Bloomberg. The Stoxx 50 and Stoxx 600 had their biggest climbs last week on Friday as benchmark indexes advanced in all 17 Western European markets.
France's CAC 40 Index added 3.4 percent, and the UK's FTSE 100 Index rose 2.5 percent, for a weekly total of 7.2 percent, its biggest since September 2001.
The Stoxx 50 has surged by a fifth since setting a six-year low on March 12 and the Stoxx 600 is up 18 percent. Insurance companies led in the period, climbing 27 percent, as the value of their stock investments increased.
"A swift conclusion to the war will result in a rally," said Brian Tora, who helps advise on US$22 billion of assets at Gerrard Group in the UK. "We won't get a rapid return to bull-market conditions, but there is value out there still."
The Stoxx 600's chemical index added 14 percent in the period, the biggest gainer among 18 industry groups. BASF, Europe's largest chemical maker, Rhodia SA, France's largest specialty chemicals producer, and Imperial Chemical Industries Plc of the UK all climbed by about a fifth.
Bayer AG, Germany's biggest drugmaker, led Stoxx 50 gains after being cleared of legal responsibility for the illness of a Texas man.
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