European Stocks Post Weekly Gain on U.S. Debt Agreement

European stocks rallied for a second week as Republicans and Democrats agreed to raise the U.S. sovereign-debt ceiling and reopen the federal government.

Hargreaves Lansdown Plc climbed to the highest price since its initial public offering in 2007, posting the best performance on the Stoxx Europe 600 Index this week. Man Group Plc jumped 10 percent after the world’s largest publicly traded hedge-fund manager posted its first quarterly net inflows in two years. PSA Peugeot Citroen slumped 13 percent as the company was said to consider selling shares to increase its capital.

The Stoxx 600 advanced 2.2 percent to 318.47 this week. The equity benchmark has climbed for seven consecutive days, its longest winning streak this year. The gauge has risen 2.6 percent so far this month amid optimism that the U.S. Congress would increase the limit before a deadline on Oct. 17. That extended the rally this year to 14 percent.

“The last-minute deal was widely expected by the markets, which was reflected in this week’s movements,” said Benedict Goette, chief executive officer of Compass Capital AG in Zurich, which helps oversee about 700 million Swiss francs ($776 million). “We may see an extension of the benign dynamic we currently seem to be in. The market will postpone any second thought on the U.S. budget divide until its next deadline.”

National benchmark indexes advanced in every western-European market except Iceland this week. Germany’s DAX and France’s CAC 40 rose 1.6 percent, while the U.K.’s FTSE 100 (UKX) gained 2.1 percent.

U.S. Deal

In the U.S., President Barack Obama on Oct. 17 signed into law a measure to extend the nation’s borrowing authority into early 2014 and end the government shutdown that started Oct. 1.

Federal Reserve Bank of Chicago President Charles Evans said late yesterday that the U.S. central bank should not begin reducing the pace of its $85 billion of monthly asset purchases because the government stopped publishing the data used to gauge the economy’s health during the shutdown.

China’s economy accelerated in the three months through September with gross domestic product rising 7.8 percent from a year earlier, the National Bureau of Statistics said today. The world’s second-largest economy grew 7.7 percent and 7.5 percent in the first and second quarters of this year. A separate release today showed that industrial production advanced in September by 10.2 percent, matching economists’ estimates.

Hargreaves Lansdown rallied 15 percent after the U.K.’s biggest retail broker said assets under administration jumped 8 percent to a record 39.3 billion pounds ($64 billion) in the three months through Sept. 30.

Man Group

Man Group jumped 10 percent. Sales of the company’s funds totaled $4.1 billion in the third quarter, exceeding redemptions of $3.4 billion. The $700 million inflow bucked the predictions of analysts including Peter Lenardos of RBC Capital Markets in London, who had projected $500 million of outflows.

Royal Mail Plc increased 10 percent this week as retail investors traded the shares for the first time on Oct. 15.

Bellway Plc surged 12 percent as the U.K. housebuilder said annual profit rose 37 percent. Net income for the 12 months through July climbed to 108.6 million pounds, or 89.3 pence a share, from 79.3 million pounds a year earlier.

Peugeot declined 13 percent as people familiar with the matter said the carmaker’s board will discuss increasing its capital at a scheduled meeting on Oct. 22. Two of the people said Peugeot may sell stakes to Dongfeng Motor Corp. and the French government.

Outotec, Burberry

Outotec Oyj sank 16 percent, the worst weekly performance on the Stoxx 600, after the supplier of smelters to mining companies lowered its sales and profit forecasts for 2013. The Finnish company forecast that it will generate no more than 2.1 billion euros ($2.9 billion) of revenue because its order intake has declined in the first nine months of this year. Outotec had predicted sales of as much as 2.3 billion euros.

Burberry Group Plc slipped 4.9 percent after saying Chief Executive Officer Angela Ahrendts will leave for Apple Inc. The company named Christopher Bailey as her successor.

Dassault Systemes SA (DSY) fell 11 percent, its biggest weekly slide in almost five years. The software developer whose clients include Benetton Group SpA reported revenue of 496 million euros in the third quarter, missing its own forecast of 520 million euros. The company also said it may also reduce its projections for the current quarter on Oct. 24.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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

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