European Stocks Climb as Chinese Manufacturing Expands

European (SXXP) stocks climbed, following their longest stretch of monthly gains in six years, as two measures of Chinese manufacturing increased and Greece offered to spend 10 billion euros ($13 billion) buying back bonds.

Cable & Wireless Communications Plc (CWC) rose 1.2 percent after agreeing to sell its Monaco and Islands unit to Bahrain Telecommunications Co. for $680 million. Colruyt SA (COLR) slid 1.9 percent after first-half earnings before interest and taxes missed analysts’ estimates.

The Stoxx Europe 600 Index advanced 0.1 percent to 276.13 at the close in London as four stocks rose for every three that fell. The equity benchmark has rallied 18 percent from this year’s low on June 4 as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve started a third round of asset purchases.

“Greece has made quite a bit of progress,” said Philippe Gijsels, head of fixed-income research at BNP Paribas Fortis in Brussels. “If Greece can manage the buyback and get a new tranche of aid, then the Greece problem will be out of the way until the end of 2013. China is clearly improving and this is helping equities and commodities. We’re in a sweet spot for the next two to three months.”

China’s official Purchasing Managers’ Index, a gauge of manufacturing, rose to 50.6 in November, the highest in seven months, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Dec. 1. A reading above 50 indicates expansion.

A separate survey by HSBC Holdings Plc and Markit Economics, which focuses on smaller businesses, today showed that activity increased last month.

Debt Buyback

Greece’s Public Debt Management Agency invited investors to tender bonds, offering an average maximum purchase price for securities maturing from 2023 to 2042 of 34.1 percent. The offer period ends on Dec. 7.

Chancellor Angela Merkel opened the possibility that Germany will ultimately accept a write-off of Greek debt.

Merkel told Bild newspaper yesterday that euro-area leaders might consider writing off debt once the country has a budget surplus. The chancellor had ruled out such a scenario as violating European Union treaties.

European equities will rally in 2013 with the Euro Stoxx 50 Index reaching 3,000, according to Bank of America Corp. The price-to-earnings ratio for the gauge of the 50 biggest stocks in the euro area will climb to 11.8 by the end of next year, strategist John Bilton wrote in a note. The companies were valued at 11.1 times estimated earnings on Nov. 30, according to data compiled by Bloomberg.

U.S. Manufacturing

In the U.S., a report showed that manufacturing unexpectedly contracted in November. The Institute for Supply Management’s factory index slipped to 49.5 from 51.7 in October. The median economist estimate had called for a reading of 51.4, according to a Bloomberg News survey.

National benchmark indexes gained in 13 of the 18 western- European markets. France’s CAC 40 advanced 0.3 percent and Germany’s DAX added 0.4 percent, while the U.K.’s FTSE 100 increased 0.1 percent.

Greece’s ASE jumped 1.3 percent, as Piraeus Bank SA (TPEIR) soared 11 percent to 38.9 euro cents and National Bank of Greece SA (ETE), the country’s biggest lender, rose 3.8 percent to 1.37 euros.

CWC, Colruyt

CWC rose 1.2 percent to 35.1 pence, its biggest increase in three weeks. Bahrain Telecommunications, the state-controlled company known as Batelco (BATELCO), agreed to pay $680 million. Batelco said it will acquire CWC’s businesses in the Maldives, Channel Islands and Isle of Man, Seychelles, South Atlantic and Diego Garcia as well as 25 percent of Cie. Monagesque de Communications SAM. Cie. Monagesque de Communications holds CWC’s 55 percent stake in Monaco Telecom.

Colruyt lost 1.9 percent to 34.71 euros after Belgium’s biggest discount food retailer posted first-half Ebit of 230.8 million euros. The average analyst estimate had called for earnings of 236.9 million euros. Exane BNP Paribas cut its share-price forecast by 3 percent to 31 euros.

Banco Espirito Santo SA (BES) climbed 4.4 percent to 80.1 euro cents. JPMorgan Chase & Co. raised the Portuguese bank to overweight, recommending that investors buy the shares to benefit from European Central Bank intervention in Portugal.

Alcatel-Lucent SA (ALU) advanced 2.3 percent to 86.1 euro cents. The unprofitable network-equipment supplier has short-term upside because of its potential for asset sales and refinancing, according to Deutsche Bank AG. The brokerage raised its price forecast by 25 percent to 1 euro.

Akzo Nobel NV (AKZA) rose 1.8 percent to 44.73 euros. Chief Executive Officer Ton Buechner pledged to return to his post and deliver an update on the company’s strategy following sick leave for fatigue. Buechner and supervisory board member Antony Burgmans will hold a conference call with investors and analysts on Dec. 14, the company said.

Mediaset SpA (MS) jumped 6.7 percent to 1.36 euros, the biggest advance on the Stoxx 600. JPMorgan Chase & Co. reiterated its overweight recommendation, a rating similar to buy, on the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi.

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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