European Stocks Rise, Extending Biggest Weekly Jump Since 2008

European stocks climbed, with the Stoxx Europe 600 Index extending its largest weekly rally since November 2008, after a report showed that the U.S. unemployment rate fell below 9 percent last month.

Commerzbank AG (CBK) rose 11 percent after a report that the lender has a plan to shore up its capital without state aid. Home Retail Group Plc (HOME) surged 8.9 percent following a report that private-equity firms CVC Capital Partners and Bridgepoint Capital Holdings may be considering a cash bid.

The Stoxx 600 rose 0.9 percent to 240.73 at the close in London. The benchmark has rallied 8.7 percent this week, its biggest advance in three years, as the European Central Bank and five other central banks lowered the cost of dollar funding, China cut its reserve-requirement ratio for banks and U.S. consumer confidence unexpectedly rose in November.

“What is exciting is that the unemployment rate has fallen to 8.6 percent,” said Markus Huber, head of German sales trading at ETX Capital in London. “It might improve economic sentiment ahead of Christmas with fewer people being out of work.”

A Labor Department report showed unemployment in the U.S. unexpectedly dropped in November to a two-year low, while employers added fewer workers than projected and earnings eased, indicating the labor market is making limited progress.

The jobless rate dropped to 8.6 percent, the lowest since March 2009, the release showed. Payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary- help agencies, after a revised 100,000 increase in October that was more than initially estimated. The median estimate in a Bloomberg News survey had called for a gain of 125,000.

Budget Monitoring

German Chancellor Angela Merkel said earlier today that only fiscal union will tackle the euro area’s debt crisis at its roots, as she used a speech to lawmakers in Berlin to outline her position before a European Union summit on Dec. 9. The euro area needs fiscal oversight that’s “binding” and punishes states that persistently breach debt and deficit rules.

French President Nicolas Sarkozy called for “more discipline” and automatic penalties for nations that break fiscal rules late yesterday. In his speech in Toulon, France, Sarkozy said the 17-nation euro area, bound by a currency introduced a decade ago and intended to be permanent, risked “exploding” if members failed to converge.

ECB President Mario Draghi signaled yesterday that the European Central Bank could do more to fight the sovereign-debt crisis in return for closer fiscal union.

A European proposal to channel loans from national central banks through the International Monetary Fund may deliver as much as 200 billion euros ($268 billion) to fight the debt crisis, two people familiar with the negotiations said.

‘Soaking in Stimulus’

“The market is soaking in stimulus, low rates and improving jobs data all at once which makes for bullish moves,” said Daniel Weston, a portfolio adviser at Schroeder Equities GmbH in Munich.

National benchmark indexes climbed in every western- European market except Norway. France’s CAC 40 Index advanced 1.1 percent and the U.K.’s FTSE 100 Index rose 1.2 percent. Germany’s DAX Index increased 0.7 percent.

Commerzbank surged 11 percent to 1.50 euros as Die Welt said Germany’s second-biggest bank could generate about 1 billion euros by retaining profit through June 30. The lender could boost its core capital by 3 billion euros by offloading some 30 billion euros in risk-weighted assets, the newspaper said, citing options that its supervisory board will discuss today. The lender could also generate as much as 6 billion euros by converting hybrid capital, according to Die Welt. The German newspaper cited banking officials.

European Lenders Jump

Banking shares were the best-performing industry today, soaring 4.3 percent. HSBC Holdings Plc (HSBA) rose 3 percent to 510.7 pence in London, while BNP Paribas (BNP) SA surged 9.4 percent to 31.60 euros in Paris.

Home Retail jumped 8.9 percent to 98.4 pence, the largest increase in nine months and the seventh day of gains for the longest rising streak in five years. CVC and Bridgepoint are working on a deal that would value the owner of the Argos chain at a “significant premium” to its market price, the Daily Mail said today. Spokesmen for Home Retail, Bridgepoint and CVC declined to comment.

Mining Companies Climb

BHP Billiton Ltd. (BHP) and Rio Tinto Group, the world’s biggest mining companies (BLT), paced gains in commodity stocks, rising 4 percent to 2,000.5 pence and 1.3 percent to 3,346.5 pence, respectively. The industry was among the best performers in the Stoxx 600 this week, surging 12 percent. Aluminum, copper, lead, nickel and zinc all climbed on the London Metal Exchange today.

Daimler AG (DAI) advanced 1.7 percent to 33.93 euros. A report from Autodata Corp. yesterday showed that U.S. light-vehicle sales accelerated to their fastest pace in 2011. Daimler sells more than 17 percent of its vehicles in the U.S., Bloomberg data shows.

Separately, Daimler plans to cut production costs by 10 percent annually in 2012 and 2013, Reuters reported, citing Wolfgang Nieke, a works council member.

Neopost SA gained 2.1 percent to 52.65 euros as it said after the market close yesterday that its third-quarter revenue (NEO) rose to 242 million euros from 233.7 million euros a year earlier. Neopost also confirmed its full-year outlook.

ThyssenKrupp AG (TKA) fell 6.4 percent to 17.80 euros, the biggest decline in the Stoxx 600 today, after Germany’s biggest steelmaker posted a fiscal full-year loss because of 2.9 billion euros of impairments charges, mostly after it delayed the construction of a plant in Brazil.

-- Editors: Will Hadfield, Srinivasan Sivabalan

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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