European Stocks Rally as ECB Buys Bonds; Shares of BHP Billiton, BMW Rise

European stocks rose, sending the Stoxx Europe 600 Index to its biggest two-day rally since July, as the European Central Bank extended an emergency loan program and housing data bolstered confidence in the U.S. economy.

BHP Billiton Ltd., the world’s largest mining company, led commodity companies higher. Bayerische Motoren Werke AG paced gains among carmakers, surging to a record high, after U.S. sales last month jumped 30 percent. Hochtief AG led construction companies higher as Russia and Qatar won the rights host soccer’s World Cup.

The Stoxx 600 gained 1.7 percent to 271.61 at the 4:30 p.m. close in London, its highest level since Nov. 15. The gauge jumped 2 percent yesterday amid speculation ECB policy makers may step up measures to contain the region’s worsening sovereign-debt crisis.

“The ECB’s decision to delay the withdrawal of the emergency liquidity measures is clearly positive for stocks,” said Henrik Lundin, chief strategist at Nordea Bank AB. “The ECB has been too hawkish given the risk of an extended debt crisis and today’s step is definitely a leap in the right direction.”

Market Tensions

The ECB also bought more government bonds as President Jean-Claude Trichet pledged to fight “acute” financial market tensions. The central bank will offer banks unlimited loans through the first quarter over periods of seven days, one month and three months, Trichet told reporters at a press conference in Frankfurt.

Irish and Portuguese bonds surged as ECB officials embarked on a new round of debt purchases, according to traders with knowledge of the transactions.

National benchmark indexes climbed in 17 of the 18 western European markets today. The U.K.’s FTSE 100 jumped 2.2 percent, France’s CAC gained 2.1 percent and Germany’s DAX advanced 1.3 percent.

Stocks extended gains after a report showed pending sales of U.S. existing houses unexpectedly jumped by a record 10 percent in October, indicating the industry at the center of the last recession is stabilizing as the job market improves.

Another report showed claims for jobless benefits over the past month on average dropped to a two-year low. Combined with figures showing chain-store sales topped estimates last month, the reports added to evidence the world’s largest economy is strengthening.

BHP, BMW

BHP Billiton advanced 3.7 percent to 2,450 pence in London as copper prices rose to the highest in almost three weeks. Rio Tinto Group, the world’s third-biggest mining company, climbed 4.9 percent to 4,415 pence. Xstrata Plc increased 2.6 percent to 1,403 pence.

BMW gained 4.8 percent to 63.80 euros. Its namesake brand was the top-selling luxury auto marque in the U.S. in November, overtaking Daimler AG’s Mercedes-Benz in year-to-date deliveries. A gauge of automakers on the Stoxx 600 rose 3.4 percent. Renault SA climbed 3.9 percent to 44.11 euros.

Hochtief jumped 3.4 percent to 60.19 euros as soccer’s ruling body FIFA announced Russia and Qatar will host the 2018 and 2022 World Cups respectively.

Russia’s bid includes construction of 13 stadiums and renovation of three more at a projected cost of $3.8 billion as well as “major upgrades and capacity increases” at most airports serving the 13 proposed host cities.

Qatar pledged to more than double the number of hotel rooms, build nine stadiums and refurbish three others and construct a rail and metro network for the tournament.

Spin Off

TNT NV rallied 8 percent to 20.35 euros as Europe’s second- biggest express-delivery company said it will spin off its express-delivery business.

Rexel SA, the Paris-listed electrical equipment distributor, rose 5.4 percent to 15.95 euros after saying it expects 2010 sales to be close to 11.9 billion euros ($15.63 billion) and the acquisition of Grossauer will add to earnings from the first year.

Petrofac Ltd. gained 2.8 percent to 1,491 pence after the oilfield services and engineering provider was upgraded to “buy” from “neutral” at Goldman Sachs.

Desire Petroleum Plc soared 25 percent to 132.25 pence as the U.K. explorer focused on the Falkland Islands said its Rachel North well discovered oil.

Fischer, Wendel

Georg Fischer AG rallied 9.7 percent to 548.5 Swiss francs as UBS AG raised its price estimate on the shares 25 percent to 710 francs, citing a successful restructuring plan and growing demand in Asia.

Wendel SA advanced 7.9 percent to 67.06 euros as the publicly traded private equity company said its net asset value stood at 85.7 euros on Nov. 23, up 64.2 percent from a year ago and up 35.6 percent since Aug. 25.

Premier Foods Plc surged 12 percent to 18.56 pence. Nestle SA has submitted a bid for Premier Foods’s Quorn meat-free food range through its Osem Group venture, Sky News reported on its website, without citing anyone. The deal may be valued at about 230 million pounds, according to the news service.

Britvic Plc, the maker of Robinson’s fruit drinks, slumped 2.9 percent to 476.2 pence. The company posted a net loss of 48.2 million pounds ($75.3 million) in the 53 weeks ended Oct. 3, compared with a profit of 46.8 million pounds for the 52 weeks ended Sept. 27, 2009.

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

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

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