European stocks rose for a second week, led by financial firms, after Barclays PLC and HSBC Holdings PLC reported a “strong” start to this year and the US Federal Reserve pledged to buy US$300 billion in US government bonds.
Barclays, the UK’s third-biggest lender, surged 42 percent, while HSBC, Deutsche Bank AG and UBS AG also climbed. Companies relying on US sales, including Royal Ahold NV, limited gains in the Dow Jones STOXX 600 Index as the US dollar tumbled, while Group Danone SA paced losses among businesses less geared to economic growth.
The STOXX 600 advanced 2.4 percent to 172.58. The gauge measure has rebounded 9.3 percent since reaching a 12-year low on March 9 as Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co said they made money during the first two months of this year, trimming this year’s drop to 13 percent.
“We had had a very aggressive sell-off, investors were very defensive, and there was a lot of cash on the side,” said Adrian Darley, who helps oversee about US$101 billion as head of equities at Ignis Asset Management Ltd. “There’s been a lot of value in the market for a while.”
National benchmark indexes climbed in all 18 of the western European markets except Luxembourg this week. The UK’s FTSE 100 rose 2.8 percent, led higher by Aviva PLC. Germany’s DAX added 2.9 percent, and France’s CAC 40 advanced 3.2 percent as Axa SA rallied.
Banks in the region have underpinned a 21-month market rout as they reported more than US$370 billion in credit losses.
“Markets have seen an increase in signs pointing to an end of the stressed phase,” said Gunnar Stangl, head of portfolio strategy at Dresdner Kleinwort in Frankfurt. “While the recession still has to run its course around the globe, valuations may start to set their sights beyond the downturn.”
Banks in the STOXX 600 added 10 percent as a group, while a measure for insurers soared 13 percent.
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