March 5 (Bloomberg) -- European stocks climbed for the first time in six days, led by banks, phone companies and automakers, on speculation they have fallen too much compared with earnings.

Allianz SE, the region's biggest insurer, HSBC Holdings Plc, the largest bank, and phone maker Nokia Oyj rallied after valuations for the Dow Jones Stoxx 600 Index declined to near the cheapest levels since at least 2002. Stocks extended gains as a report showed U.S. service industries shrank less than expected and investors speculated banks will provide capital that bond insurers require to keep their AAA ratings.

The Stoxx 600 added 1.7 percent to 315.61, as all 18 industry groups advanced. The Stoxx 50 rose 1.5 percent, and the Euro Stoxx 50, a measure for countries sharing the euro, rallied 2.1 percent.

``Black clouds over the market are dominating headlines but there are still sectors out there that look particularly cheap,'' said Henk Potts, who helps oversee $45 billion at Barclays Stockbrokers in London.

Concern the collapse of U.S. subprime mortgages and a slowdown in the world's largest economy will curb profit growth helped push the price-earnings ratio on the Stoxx 600 down to 11.6 yesterday, near the lowest since at least January 2002, Bloomberg data show.

The regional index has dropped 13 percent this year, led by banks, retailers and telecommunications companies.

National Markets

National stock indexes climbed in all of the 17 western European markets that were open. France's CAC added 1.7 percent, while the U.K.'s FTSE 100 increased 1.5 percent. Germany's DAX gained 2.1 percent.

Allianz added 2.6 percent to 116.04 euros. Axa SA, Europe's second-largest insurer, advanced 1.7 percent to 21.76 euros. HSBC, the region's biggest bank by market value, rose 2.5 percent to 788.5 pence.

CNBC today reported Ambac's rescue agreement with banks may be completed today. Citigroup Inc. and Barclays Plc are leading the talks, which extended past 10 p.m. last night, CNBC said, without citing anyone.

Nokia, the world's largest maker of mobile phones, rose 3.6 percent to 22.9 euros, snapping a four-day decline that sent the shares to the lowest since Jan. 23.

Siemens AG, Europe's biggest engineering company, gained 3.3 percent to 85.47 euros, rebounding from a six-week low. Carmaker Daimler AG rose 1.8 percent to 54.89 euros.

EasyJet

EasyJet Plc climbed 4.4 percent to 425.75 pence after Goldman, Sachs & Co. raised its recommendation for Europe's second-biggest low-cost airline to ``buy'' from ``neutral.''

The ``valuation now looks compelling,'' Goldman wrote in a research note.

EasyJet's shares have dropped 31 percent this year, compared with a 15 percent decline for the Stoxx 600 Travel & Leisure Index, a benchmark measure for the industry.

Ryanair Holdings Plc, Ireland's biggest airline, gained 4.8 percent to 3.26 euros. British Airways Plc, Europe's third- largest carrier, climbed 5.8 percent to 265 pence.

IG Group Plc paced a rally in financial services company, climbing 10 percent to 381.75 pence. The company which takes wagers on financial markets under the IG Index name said third- quarter sales rose 55 percent to 46 million pounds ($91 million) after adding more customers betting on market volatility.

Liberty International Plc increased 9.2 percent to 1,030 pence after the Independent reported the largest U.K. mall owner is in talks that might create the world's biggest shopping-mall company.

Possible suitors include the Government of Singapore Investment Corp., a sovereign-wealth fund, and Westfield Group, the world's biggest shopping-center owner, the Independent reported.

The newspaper cited an unidentified person close to the matter. Michael Sandler, a Liberty spokesman, and Julia Clarke, a Westfield spokeswoman, declined to comment on the speculation.

Man Group

Man Group Plc, the largest publicly traded hedge-fund manager, increased 5.7 percent to 566 pence after saying its flagship fund posted its best return this year.

Man AHL Diversified Futures Ltd. climbed 5.9 percent in the week ended March 3. The fund, which takes positions in futures markets, likely benefited from rallies in crude oil, wheat and other commodities, said Jason Streets, an analyst at Evolution Group Plc in London.

Credit Agricole SA rallied 5.8 percent to 18.2 euros, snapping five days of declines, after France's second-largest bank by assets said it will raise its dividend and said it doesn't plan any ``major'' acquisitions this year.

The bank today posted its first quarterly loss of 857 million euros.

Balfour Beatty Plc added 6.5 percent to 457.75 pence after Britain's biggest builder said full-year profit surged 66 percent to 151 million pounds. Revenue climbed 44 percent to 6.47 billion pounds. Analysts estimated profit of 145 million pounds on sales of 6.15 billion pounds.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

Last Updated: March 5, 2008 12:20 EST