March 4 (Bloomberg) -- European stocks rebounded from a 12- year low, sending the Dow Jones Stoxx 600 Index to its biggest gain of 2009 on speculation that China will broaden efforts to boost growth in the world’s third-largest economy.

BHP Billiton Ltd. and Xstrata Plc added more than 13 percent as copper, nickel and aluminum climbed on optimism consumption in China will increase after a former statistics chief said Premier Wen Jiabao will announce a stimulus-package tomorrow. Volkswagen AG, the biggest overseas carmaker in China, gained 7.4 percent. Standard Chartered Plc jumped 15 percent as UBS AG recommended the U.K.’s second-biggest bank by market value.

The Dow Jones Stoxx 600 Index added 3.9 percent to 167.62 in London. The deepening global recession, a third government rescue for Citigroup Inc. and dividend cuts at companies from HSBC Holdings Plc to General Electric Co. have sent the regional index to a 16 percent drop this year.

“The Chinese are about to come up with another huge fiscal push,” said Philip Manduca, who oversees $1 billion as head of investments at ECU Group in London. “They are going to pump an enormous amount of money in. This will help in the long term,” he said in a Bloomberg Television interview.

National benchmark indexes climbed in 17 of the 18 western European markets. The U.K.’s FTSE 100 rose 3.8 percent. Germany’s DAX added 5.4 percent. France’s CAC 40 rallied 4.7 percent as France Telecom SA gained on a dividend increase.

Economic Growth

Companies whose profits are most tied to economic growth led Europe’s advance, with gauges of basic-resource producers, construction shares and automakers climbing more than 8 percent.

China’s Wen will announce a new stimulus package tomorrow, adding to a 4 trillion yuan ($585 billion) spending plan, former Statistics Bureau head Li Deshui said today, without elaborating.

BHP Billiton, the world’s largest mining company, surged 13 percent to 1,172 pence in London. Rio Tinto Group, the third biggest, jumped 14 percent to 1,846 pence. Xstrata Plc, the largest exporter of coal used by power plants, rallied 15 percent to 382 pence.

Copper futures advanced on optimism metals consumption in China may pick up as government stimulus packages take effect. Nickel gained 3.9 percent in London, climbing with aluminum, zinc and lead.

Volkswagen advanced 7.4 percent to 205.11 euros, trimming its 2009 drop to 18 percent.

Vinci SA, the world’s largest construction company, soared 12 percent to 27.76 euros after saying that full-year profit advanced and building margins will be maintained this year.

Standard Chartered

Standard Chartered jumped 15 percent to 724.5 pence. UBS raised its recommendation to “buy” from “neutral” following “robust” earnings reported yesterday.

France Telecom gained 2.9 percent to 17.92 euros after Europe’s third-largest phone company raised its full-year dividend to 1.40 euros a share from 1.30 euros paid for 2007. Annual gross operating profit, a measure comparable to earnings before interest, tax, depreciation and amortization, rose 2.8 percent to 19.4 billion euros ($24.3 billion). Analysts had predicted 19.1 billion euros.

Earnings for 249 companies in the Stoxx 600 that have reported earnings since Jan. 12 have dropped 94 percent, according to Bloomberg data. That compares to a 58 percent contraction in profit for the 465 companies that have reported results in the S&P 500 during the same period.

The MSCI World Index is valued at 10.6 times the earnings of its 1,680 companies, less than half this decade’s average ratio of 21.6, data compiled by Bloomberg show.

Bouygues, Zurich

Bouygues SA added 7.5 percent to 23.88 euros. The world’s second-largest construction company said fourth-quarter profit rose 16 percent to 299 million euros, helped by returns from its stake in trainmaker Alstom SA.

Zurich Financial Services AG climbed 6.3 percent to 161.1 Swiss francs after JPMorgan upgraded the shares to “overweight” saying Switzerland’s biggest insurer’s “solvency position is strong.”

“Zurich is now our top pick for three reasons: cost cutting, uplift to operating profit from reinsurance earnings, and strong non-life,” the bank wrote in a report.

Metro AG added 4.1 percent to 21.68 euros. Bank of America Corp. boosted its recommendation on Germany’s largest retailer to “buy,” saying concern over its operations in eastern Europe is “overdone.”

Hermes International SCA jumped 9.8 percent to 71.46 euros as Credit Suisse Group AG raised the shares to “neutral” from “underperform,” saying the maker of Birkin handbags is better positioned than rivals to withstand the recession.

Adecco SA slumped 2.9 percent to 32.88 francs. The world’s largest supplier of temporary workers reported a fourth-quarter loss as it wrote down the value of goodwill on its Tuja acquisition in Germany and assets in the U.K.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

Last Updated: March 4, 2009 13:02 EST