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Europe Stocks Advance; Stoxx 600 Heads for Weekly Gain

European (SXXP) stocks climbed, with the Stoxx Europe 600 posting its first weekly advance in three, after a report showed the U.S. jobless rate unexpectedly declined in September.

BNP Paribas SA (BNP) and Bayerische Motoren Werke AG (BMW) led gains in shares sensitive to economic growth. Burberry (BRBY) Group Plc, the U.K.’s largest luxury house, rose after Morgan Stanley lifted its recommendation on the shares. Hunting Plc (HTG) gained 3.4 percent after Deutsche Bank AG named the company among its preferred U.K. oil stocks.

The Stoxx 600 climbed 1 percent to 274.11 at the close of trading. The index posted a 2.1 percent weekly gain and has rallied 17 percent from this year’s low on June 4 as European Central Bank policy makers agreed on an unlimited asset-purchase program and the Federal Reserve announced a third round of quantitative easing.

“Overall, the employment report was good news,” said Jacques Porta, who helps manage $627 million at Ofi Patrimoine in Paris. “The cherry on the cake was the drop in the unemployment rate. It’s satisfactory and reassuring.”

The unemployment rate in the U.S. unexpectedly fell to 7.8 percent in September, the lowest since January 2009, as employers took on more part-time workers.

The economy added 114,000 workers last month after a revised 142,000 gain in August that was more than initially estimated, Labor Department figures showed today in Washington. The median estimate of 92 economists surveyed by Bloomberg called for an advance of 115,000. The jobless rate dropped from 8.1 percent and hourly earnings climbed more than forecast.

No Intervention

ECB President Mario Draghi reiterated during a press conference in Slovenia yesterday that the central bank won’t start intervening in bond markets until governments like Spain request a bailout and agree to conditions. He also ruled out allowing the ECB to take losses in any further Greek debt restructuring and damped speculation of another interest-rate cut.

The prime ministers of Italy, Spain, and France meet at a summit of Mediterranean leaders in Malta today.

German Chancellor Angela Merkel will travel to Athens for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro.

Merkel’s visit to the Greek capital Oct. 9 to meet with Prime Minister Antonis Samaras underscores the shift in her stance since she held out the prospect last year of Greece exiting the 17-nation currency regime.

National Indexes

National benchmark indexes rose in all of the 18 western European markets except Iceland. France’s CAC 40 advanced 1.6 percent, Germany’s DAX climbed 1.3 percent and the U.K.’s FTSE 100 added 0.7 percent.

Gauges of banks and automakers on the Stoxx 600 were the best performers of the index’s 19 industry groups. BNP Paribas, France’s biggest bank, rallied 3.5 percent to 39.39 euros. BMW advanced 2.1 percent to 60.99 euros.

Banco Espirito Santo SA (BES) led gains on the Stoxx, climbing 8.6 percent to 68.4 euro cents. Shares rose 21 percent this week.

Burberry rallied 2.8 percent to 1,028 pence. Morgan Stanley raised its recommendation on the stock to overweight, the equivalent of a buy rating, from equal weight.

Hunting advanced 3.4 percent to 855 pence. Deutsche Bank, which recommended that investors buy the stock, said the company has positive earnings momentum and attractive relative value.

Greek Banks

Shares of National Bank of Greece SA and Eurobank Ergasias SA (EUROB) were suspended after gaining 4 percent to 2.09 euros and 7.3 percent to 1.17 euros, respectively.

National Bank, the nation’s biggest lender, and domestic competitor Eurobank Ergasias are in talks to merge, according to two people with knowledge of the situation.

The banks may announce the discussions as soon as today, said the people, who asked not to be identified because the plans are private. Talks are at an early stage and may not lead to an offer, one person said. National Bank will hold an extraordinary board meeting today in Athens, another person said. Officials at the Athens-based banks declined to comment.

Givaudan SA (GIVN), the biggest maker of flavors and fragrances, rose 1.8 percent to 926 Swiss francs. The stock was added to the “most-preferred” list of European chemical companies at UBS.

Lonza AG (LONN) dropped 4.2 percent to 48.48 francs after saying it hasn’t decided how to proceed with trials for a copy of Roche Holding AG’s best-selling Rituxan cancer drug with partner Teva Pharmaceutical Industries Ltd.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net

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

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