European Stocks Advance Amid China Stimulus Speculation

European stocks rose the most in a month as an unexpected decline in Chinese manufacturing boosted speculation the government will announce further stimulus.

BHP Billiton Ltd. (BHP), the world’s biggest mining company, climbed 1 percent as copper gained. Davide Campari-Milano SpA (CPR) surged 8 percent after agreeing to buy Lascelles deMercado & Co., the Jamaican maker of Appleton rum. U.K. homebuilders advanced as analysts recommended Bovis Homes Group Plc. (BVS)

The Stoxx Europe 600 Index (SXXP) climbed 0.8 percent to 268.47 at the close of trading, the largest gain since Aug. 3. The benchmark gauge has risen 15 percent from this year’s low on June 4 amid speculation central banks will undertake further so- called quantitative easing, or QE, to support the economy.

“We are waiting anxiously for the U.S. to see whether they are going to do QE3, to see what the European Central Bank is going to do and what China is going to do,” Nick Maroutsos, who oversees about $2.9 billion as managing director and co-founder of Sydney-based Kapstream Capital, said in an interview on Bloomberg Television. “’Tis the season for stimulus, in terms of monetary policy as well as fiscal policy.”

The volume of shares changing hands in Stoxx 600 companies was 35 percent lower than the 30-day average, according to data compiled by Bloomberg. U.S. markets were closed for the Labor Day holiday.

FTSE, DAX

National benchmark indexes gained in all western European markets, except for Greece and Iceland. The U.K.’s FTSE 100 (UKX) increased 0.8 percent. France’s CAC 40 rose 1.2 percent, while Germany’s DAX climbed 0.6 percent.

A Chinese government survey released on Sept. 1. showed factory output unexpectedly shrank for the first time in nine months in August, fueling speculation policy makers will announce more measures to drive growth. Separate data from the Australian Bureau of Statistics today showed retail sales fell in July by the most in almost two years.

In the euro area, an August gauge of manufacturing based on a survey of purchasing managers was revised to 45.1 from the reading of 45.3 estimated earlier, Markit Economics said today. The index has held for 13 months below 50, indicating contraction.

Euro-region nations are this week asking investors to stake more than 20 billion euros ($25 billion) on second-guessing the ECB, selling the most debt in two months before the central bank’s meeting on Sept. 6.

Debt Auctions

Spain, France, Austria and Belgium return to the market after a monthlong pause, with Germany also selling debt. The auctions take place before the ECB’s meeting in Frankfurt, where President Mario Draghi may reveal details of a new bond-buying program.

“Yet more weak manufacturing data from the euro zone was shrugged off, as investors look toward Thursday’s ECB meeting, when Mario Draghi is expected to unveil something impressive to stem the euro-zone crisis,” said Yusuf Heusen, a sales trader at IG Index in London.

A gauge of mining companies was among the biggest gainers on the benchmark Stoxx 600, climbing 1.3 percent, as base metals advanced on the London Metal Exchange.

BHP Billiton gained 1 percent to 1,855 pence. Boliden AB (BOL), Scandinavia’s only copper producer, rose 2.3 percent to 99.55 kronor and Kazakhmys Plc (KAZ) increased 2.9 percent to 610 pence.

Campari rallied 8 percent to 5.90 euros, the biggest gain since October 2008. The Italian distiller said it will purchase Lascelles deMercado in a deal worth $414.8 million to hasten its push into overseas markets.

Homebuilders Rise

U.K. homebuilders advanced as Panmure Gordon & Co. upgraded Bovis to buy from hold, citing “relative stability” in the housing market over the summer.

“We believe this stability will continue into the important autumn selling season,” Mark Hughes, a London-based analyst at Panmure Gordon, wrote in a note to clients.

Bovis climbed 4.1 percent to 492.6 pence, Taylor Wimpey Plc (TW/) increased 3.9 percent to 53.3 pence, Barratt Developments Plc (BDEV) advanced 5.7 percent to 158.6 pence and Persimmon Plc (PSN) increased 5.2 percent to 734 pence.

Nokia Oyj (NOK1V), which competes with Samsung Electronics Co. in making smartphones that run Microsoft Corp.’s mobile operating system, advanced 4.7 percent to 2.37 euros. Samsung fell in Seoul as Apple Inc. sought a ban on U.S. sales of Galaxy smartphones, deepening their global patent dispute.

ARM Holdings Plc, (ARM) whose chip designs power Apple’s iPhone, declined 2.5 percent to 559.5 pence after Deutsche Bank AG lowered its recommendation to sell from hold, saying the company is likely to face increased competition.

Rhoen-Klinikum AG (RHK) sank 21 percent to 14.99 euros, the largest drop since at least October 1998. The company said Fresenius SE decided against reviving its takeover bid, capping more than four months of jockeying over the top spot in the German hospital market.

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

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

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