Jan. 24 (Bloomberg) -- European stocks gained the most since 2003 as talks to bail out bond insurers, rising profits at Nokia Oyj and China's economic growth boosted expectations that equity markets will weather a slowdown in the U.S.

UBS AG, the region's biggest bank by assets, and insurer Axa SA jumped more than 8 percent. Nokia, the world's largest mobile-phone maker, surged 15 percent as profit beat analysts' estimates. Societe Generale SA fell after reporting a 4.9 billion-euro ($7.1 billion) trading loss and accusing a trader of fraud.

The Dow Jones Stoxx 600 Index surged 5.2 percent to 322.08, its biggest gain since March 2003, the month marking the turning point in a three-year rout after the Internet bubble burst. The index earlier this week extended declines from a 6 1/2-year high on June 1 to more than 20 percent, the common definition of a bear market, on concern the U.S. will enter a recession.

``Investors are starting to return to the market,'' said Guillaume Duchesne, a Geneva-based strategist at Fortis Private Banking, which oversees the equivalent of $117 billion. The plan ``is a good signal that reassures the stock market and stabilizes investor sentiment,'' he said.

New York regulators are pushing financial institutions to rescue bond insurers in a bid to stave off more writedowns. The bailout comes as the Bush administration and House congressional leaders near a tentative agreement on a stimulus plan, lawmakers said.

The Federal Reserve this week cut its benchmark overnight lending rate by three-quarters of a point to 3.5 percent to support the economy.

National Markets

National benchmarks advanced in all of the 18 western European markets today. France's CAC 40 rallied 6 percent. The U.K.'s FTSE 100 jumped 4.8 percent, and Germany's DAX advanced 5.9 percent.

The Stoxx 50 added 5.4 percent, and the Euro Stoxx 50, a measure for the euro region, rose 6.5 percent.

Stocks extended gains after German business confidence unexpectedly increased. The Ifo research institute's business climate index rose to 103.4 in January from 103. That's higher than the 102.3 median estimate in a Bloomberg News survey.

The risk of European companies defaulting on their debt fell today, according to traders of credit-default swaps.

China's gross domestic product advanced 11.2 percent in the three months ended Dec. 31, compared with 11.5 percent in the third quarter, the statistics bureau said in Beijing.

UBS jumped 8.1 percent to 47.34 Swiss francs. Axa, France's largest insurer, surged 10 percent to 24.3 euros.

Ambac Financial Group Inc. and MBIA Inc., the two largest U.S. bond insurers, posted the biggest gains in the S&P 500 yesterday after New York's Insurance Superintendent Eric Dinallo met with banks to discuss raising new capital for the insurers.

`Systemic Crisis'

``We have the impression that all efforts are being made to avoid a systemic crisis,'' said Clemence Bounaix, who helps oversee $5.8 billion at Richelieu Finance in Paris. ``The market is reassured.''

Allianz SE climbed 11 percent to 123.85 euros. Europe's biggest insurer said it reached its full-year profit target of 8 billion euros ($11.7 billion) for 2007 as its insurance units helped cushion writedowns at its banking division.

Nokia surged 3.02 euros to 23.74 after reporting fourth- quarter earnings per share of 47 cents and sales of 15.7 billion euros. Both figures beat analysts' estimates. The average selling price for its phones rose to 83 euros, more than the 82 euros estimated by analysts.

``Nokia is the clear winner in the industry,'' said Niklas Lund, a fund manager at Alandsbanken Asset Management in Helsinki, which oversees $1 billion of assets, including Nokia shares. ``Even the average selling price beat estimates, which has been a disappointment for its competitors for several quarters.''

Societe Generale

Siemens AG, Europe's largest engineering company, rose 2.5 percent to 84.30 euros after saying fiscal first-quarter profit increased on a gain from the disposal of its car-electronics division.

Net income in the three months through December jumped to 6.43 billion euros from 739 million euros. Profit, which included a 5.4 billion-euro disposal gain, beat the 5.32 billion-euro median estimate of 12 analysts in a Bloomberg News survey. Sales climbed 10 percent to 18.4 billion euros.

Societe Generale lost 4.1 percent to 75.81 euros. France's second-largest bank by market value plans to raise 5.5 billion euros from investors after discovering a case of fraud and subprime-related writedowns depleted capital.

Pernod Ricard SA rallied 11 percent to 70.76 euros. The world's second-largest liquor company raised its annual profit forecast after stronger Asian and Latin American demand for imported spirits helped second-quarter sales beat analysts' estimates.

Lifting Forecast

Operating profit will advance 12 percent, more than its prior forecast of 10 percent, the company said. Sales climbed to 2.16 billion euros in the three months through December from 2.05 billion euros a year earlier, beating the 2.09 billion-euro median estimate of eight analysts surveyed by Bloomberg.

L'Oreal SA climbed 11 percent to 84.01 euros. The world's largest cosmetics maker offered to buy PPR SA's YSL Beaute unit for 1.15 billion euros and license Yves Saint Laurent and Boucheron perfumes. PPR jumped 12 percent to 95.45 euros.

Banco Bilbao Vizcaya Argentaria SA rallied 8.7 percent to 14.20 euros. Fourth-quarter profit at the bank rose almost fivefold to 1.37 billion euros on higher lending revenue in its home market and Mexico, its second-biggest market.

Boliden AB sank 12 percent to 55.75 kronor. Europe's second- largest zinc producer reported a 79 percent decline in fourth- quarter profit because of falling prices for the metal.

ICAP Plc advanced 14 percent to 666 pence. The world's largest broker of transactions between banks said full-year pretax profit will exceed analysts' estimates as price swings in bonds, currencies and commodities boost commissions.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

Last Updated: January 24, 2008 12:06 EST