European Stocks Climb to Two-Week High; Vodafone Gains

European stocks advanced the most in four weeks as trading resumed after a four-day weekend and a report showed U.S. factory orders increased in February.

Vodafone Group Plc (VOD) rallied to its highest price in more than five years as the Financial Times’s Alphaville blog reported that AT&T Inc. and Verizon Communications Inc. are working on a joint offer for the mobile-phone company. FirstGroup Plc (FGP) surged the most in four years after Bank of America Corp. upgraded the rail and bus operator. Hellenic Bank Pcl (HB) sank 20 percent as Cypriot shares traded for the first time in more than two weeks.

The Stoxx Europe 600 Index (SXXP) climbed 1.3 percent to 297.52 at the close of trading. The gauge added 5.8 percent in the first quarter as U.S. lawmakers agreed on a compromise budget and optimism grew that central banks around the world will continue stimulus measures to support an economic recovery.

“The second quarter has started firmly, picking up the strong momentum from the first three months of the year,” Richard Hunter, head of U.K. equities at Hargreaves Lansdown Plc in London, wrote in an e-mail. “Some optimism ahead of the impending first-quarter corporate updates on both sides of the Atlantic may be tempered by the ongoing need to keep a close eye on developments in Cyprus.”

The volume of Stoxx 600 shares changing hands was 15 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.

National benchmark indexes rose in 14 of the 18 western European markets. The U.K.’s FTSE 100 advanced 1.2 percent, Germany’s DAX climbed 1.9 percent and France’s CAC 40 jumped 2 percent.

Cyprus Resignation

Cyprus Finance Minister Michael Sarris quit the government today after helping clinch the final terms of an international aid agreement to stave off a financial collapse of the island.

Sarris told reporters in Nicosia that he resigned due to a committee set up today to investigate the reasons that led to Cyprus’s economic crisis.

The Cyprus General Market Index (CYSMMAPA) slid 2.6 percent on its first day of trading since March 15. Hellenic Bank, the nation’s third-largest bank, plunged 20 percent to the lowest price since at least 1996.

Trading in Cypriot equities had been halted as the country faced a banking crisis and ejection from the euro. Shares in Cyprus Popular Bank Pcl and Bank of Cyprus Pcl, which make up 60 percent of the benchmark gauge’s weighting, will remain suspended until April 15, according to statement posted on the Cyprus Stock Exchange’s website.

U.S. Economy

Orders (TMNOCHNG) placed with U.S. factories increased in February, boosted by a pickup in demand for motor vehicles and commercial aircraft. The 3 percent gain in bookings, the biggest in five months, followed a revised 1 percent decline in January, a Commerce Department report showed today in Washington. The median forecast of 64 economists in a Bloomberg survey called for a 2.9 percent rise.

Euro-area manufacturing output contracted less than initially estimated in March. A gauge of manufacturing in the 17-nation bloc declined to 46.8 last month from 47.9 in February, London-based Markit Economics said today. That compared to an initial estimate of 46.6 on March 21. A reading below 50 indicates contraction.

The U.K. economy will avoid another recession and exports will help propel a “modest” recovery this year, according to the British Chambers of Commerce. The BCC’s gauges of domestic and foreign demand at manufacturers and services companies all rose last quarter, the London-based group said in a report, with the export measures close to a record.

Vodafone Gains

Vodafone rose 2.9 percent to 192 pence, after earlier gaining as much as 6.1 percent, as the Financial Times cited talk that Verizon and AT&T are working on a breakup bid for the U.K. group.

FirstGroup, an international passenger company with bus and rail operations, climbed 7.5 percent to 216.1 pence. Bank of America upgraded the shares to buy from underperform, citing the fading probability of equity raising and projecting a 20 percent upside on the shares.

ICAP, the world’s largest broker of transactions between banks, gained 6.1 percent to 308.1 pence as Nasdaq OMX Group Inc. said it will buy eSpeed, the electronic trading system for U.S. Treasuries, from BGC Partners Inc. for about $750 million in cash. ICAP owns BrokerTec, another electronic trading platform for the fixed income markets.

Banca Monte dei Paschi di Siena SpA slipped 2.8 percent to 18 euro cents after it reported a third straight quarterly loss, missing analysts’ estimates, on soaring bad-loan provisions and lower income from lending.

Italy’s third-biggest bank posted a fourth-quarter net loss of 1.59 billion euros ($2 billion) compared with a 5 billion- euro loss a year before, when it wrote down goodwill related to acquisitions. That missed the 686.3 million-euro loss estimated by 11 analysts 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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