European Stocks Climb for an Eighth Week; Santander Jumps

European stocks rose for an eighth week as German Chancellor Angela Merkel and French President Francois Hollande joined European Central Bank President Mario Draghi in promising to do everything to protect the euro.

Banco Santander SA (SAN) jumped 14 percent as Spanish lenders led gains on the benchmark Stoxx Europe 600 Index. (SXXP) Barclays Plc (BARC), the British lender fined for rigging Libor, climbed 4.9 percent as it posted first-half profit that beat analysts’ estimates. MAN SE slumped 7.4 percent as the German truckmaker controlled by Volkswagen AG cut its earnings forecast for 2012.

The Stoxx 600 added 0.6 percent to 259.81 this past week, its eighth consecutive advance for the longest stretch of weekly gains since January 2006. The gauge has rebounded 11 percent from this year’s low on June 4 as central banks from Europe to China eased monetary policy to help spur economic growth. The Stoxx 600 has risen 3.4 percent so far this month.

“The real focus for everyone is Europe and the comments made by Draghi and Merkel,” said Chris Beauchamp, a market analyst at IG Index in London. “They make a strong defense of the euro. But if you do not see these words backed up with real action, disappointment could quickly set in.”

The ECB may begin a new round of joint-bond purchases to ease borrowing costs in Spain and Italy, as Merkel and Hollande pledged to do everything to protect the euro.

“France and Germany are fundamentally attached to the integrity of the euro zone,” the two leaders said in a joint statement on July 27. “They are determined to do everything to protect it.”

Draghi’s Speech

The leaders of the euro area’s two biggest economies issued their statement a day after ECB President Draghi said that the central bank will act to preserve the euro.

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Draghi said in a speech in London. “And believe me, it will be enough.”

In the U.S., a Commerce Department report on July 27 showed that the world’s largest economy expanded at a faster pace in the second quarter than economists had predicted. Gross domestic product, the value of all goods and services produced, rose at a 1.5 percent annual rate after a revised 2 percent gain in the first quarter. The median forecast of economists surveyed by Bloomberg News had called for a 1.4 percent increase.

U.K. Growth

In Europe, a report showed that the U.K. economy shrank the most since 2009 in the second quarter, pushing the country into a deeper recession than economists had predicted. Gross domestic product fell 0.7 percent from the first quarter, the Office for National Statistics said on July 25. Economists had forecast a 0.2 percent decline, according to the median of 36 estimates in a Bloomberg News survey.

Banco Santander surged 14 percent even as Spain’s biggest bank reported second-quarter profit on July 26 that dropped 93 percent because of costs for purging bad loans.

Bilbao Vizcaya Argentaria SA soared 12 percent, while UniCredit SpA, Italy’s biggest lender, rallied 11 percent.

Barclays climbed 4.9 percent. The lender, which is looking for a new management team following the Libor scandal, posted pretax profit excluding one-off items for the six months to the end of June that rose 13 percent to 4.23 billion pounds ($6.7 billion). That beat the 3.9 billion-pound median prediction of eight analysts surveyed by Bloomberg.

Carmakers Rally

Daimler advanced 4.8 percent after saying second-quarter sales increased 10 percent to 28.9 billion euros ($36 billion). The world’s third-largest maker of luxury cars also posted earnings before interest and taxes of 2.24 billion euros, in line with the 2.2 billion-euro average of analyst estimates compiled by Bloomberg. An index of auto shares in the Stoxx 600 gained 2 percent this past week.

Rolls-Royce Holdings Plc (RR/) added 1.9 percent after reporting first-half profit that beat projections. Underlying pretax profit increased to 637 million pounds. That exceeded the average analyst prediction of 617 million pounds.

MAN plunged 7.4 percent after lowering its projected return on sales to about 6 percent. The Munich-based truckmaker also posted second-quarter operating profit that slumped 50 percent to 218 million euros. That fell short of the average analyst estimate for earnings of 311 million euros.

BT Group Plc, the U.K.’s largest fixed-line phone company, slid 2.8 percent, its biggest retreat since November, after reporting fiscal first-quarter sales of 4.48 billion pounds. That missed the average analyst estimate of 4.58 billion pounds in a Bloomberg survey.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

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

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