European stocks posted the largest weekly gain in 14 months, paring a quarterly loss, as German backing for an enhanced eurozone rescue fund eased concern that policymakers will be unable to contain the debt crisis and US jobs and growth data beat forecasts.
The STOXX 600 Europe Index advanced 4.6 percent to 226.18 this week, the biggest gain since July last year. The measure still lost 17 percent in the third quarter, the most since the final period of 2008, which followed Lehman Brothers Holdings Inc’s collapse.
The gauge has fallen for five straight months amid concern Greece’s debt crisis will spread to other countries in the region and as reports indicated a slowdown in the economy.
“German lawmakers’ positive vote as well as some good economic data coming from the other side of the pond were well received by market participants,” said Stephane Ekolo, chief European strategist at Market Securities in London.
Germany’s lower house of parliament approved the expansion of the European Financial Stability Facility’s firepower on Thursday, raising Germany’s guarantees to 211 billion euros (US$286 billion) from 123 billion euros.
Lawmakers in the Bundestag voted 523 in favor of the measure, while 85 voted against and three abstained.
The vote in Germany “supported the market this week,” said Guillaume Duchesne, an equity strategist at BGL BNP Paribas SA in Luxembourg. “Now we need confirmation of the political elements and positive economic elements for the trend to be sustainable.”
National benchmark indices rose in all of Western Europe’s 18 markets. France’s CAC 40 added 6.1 percent, the UK’s FTSE 100 climbed 1.2 percent and Germany’s DAX jumped 5.9 percent.
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