European Stocks Rise to 5 1/2-Year High on German Jobs

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Photographer: Ralph Orlowski/Bloomberg

A financial trader uses a smartphone as she monitors data on her computer screens at the Frankfurt Stock Exchange in Frankfurt.

European stocks rose, sending the Stoxx Europe 600 Index to its highest level since May 2008, as German unemployment fell the most in two years and Ireland returned to the bond market after completing a bailout program.

A gauge of European banks jumped to a 2 1/2 year high, contributing the most to the gain in the benchmark, as Ireland’s bond sale sent European borrowing costs lower. A.P. Moeller-Maersk A/S surged to the highest price since November 2007 on plans to sell stakes in its supermarket and department-store units. Swedish Match AB and Hugo Boss AG declined after analysts downgraded the shares.

The Stoxx 600 rose 0.7 percent to 329.4 at the close of trading. The gauge surged 17 percent last year to 15.4 times estimated earnings of its constituents, exceeding the five-year average of 12.1 times, according to data compiled by Bloomberg.

“What is good for Germany is good for the rest of Europe,” Pierre Mouton, who helps oversee $6 billion as a portfolio manager at Notz, Stucki & Cie. in Geneva, said in a telephone interview. “There is a very good chance that the European economy as a whole touched the bottom last year in terms of the cyclical picture. At this moment, investors are cautiously positive.”

The number of shares changing hands in companies listed on the Stoxx 600 was 50 percent higher than the average of the past 30 days, data compiled by Bloomberg showed.

Unemployment in Germany declined the most since December 2011, data showed today. The number of people out of work in Europe’s largest economy decreased by a seasonally-adjusted 15,000, after increasing a revised 9,000 in November, the Nuremberg-based Federal Labor Agency said. Economists in a Bloomberg News survey predicted a drop of 1,000. The adjusted jobless rate remained unchanged at 6.9 percent.

Irish Bonds

Ireland returned to debt markets with the sale of a 10-year bond after completing its international bailout last month. The nation raised 3.75 billion euros ($5.11 billion) in the auction, exceeding its minimum target. Ireland’s success may spur Portugal (GSPT10YR), also an indebted euro-area nation, to reenter the market, Credit Suisse Group AG said.

Ireland’s existing 10-year bond yield fell to the lowest for any benchmark security in almost eight years. Comparable benchmark bond yields for Portugal and Italy (GBTPGR10) fell to their lowest since May after the sale, while Greek borrowing costs tumbled to the lowest since May 2010. Spain’s benchmark 10-year bond yield fell to its lowest since April 2010.

National equity benchmarks rose in 16 of the 18 western European markets. Germany’s DAX and France’s CAC 40 gained 0.8 percent, while the U.K.’s FTSE 100 added 0.4 percent. Spain (GSPG10YR)’s IBEX 35 (IBEX) rallied 2.9 percent for its biggest increase in six months and the highest level since July 2011.

Banks Rally

A gauge of European lenders posted the biggest increase among the 19 industry groups in the Stoxx 600, rising 2.9 percent. Banco Espirito Santo SA advanced 5.7 percent to 1.20 euros, its highest price since September 2011. Banco BPI SA gained 4.4 percent to 1.39 euros, a three-year high.

In Madrid, Banco Popular Espanol SA climbed 6.6 percent to 4.96 euros. CaixaBank SA jumped 7.2 percent to 4.15 euros.

Maersk increased 3.5 percent to 62,300 kroner. The owner of the world’s largest container-shipping line said it will sell a 48.68 percent stake in Dansk Supermarked A/S and 18.72 percent of F. Salling A/S to partners F. Salling Invest A/S and F. Salling Holding A/S. Maersk (MAERSKB) said it will book a gain of 14 billion kroner ($2.56 billion) from proceeds of as much as 17 billion kroner.

Vestas Wind Systems A/S climbed 6.1 percent to 197.40 kroner, the highest price since April 2011 for the world’s biggest wind-turbine maker. The stock rose for a 10th day, its longest rally in eight months. Vestas gained 5.5 percent yesterday as it upgraded its estimate for 2013 free cash flow.

Volvo AB (VOLVB) added 4.6 percent to 88.45 kronor. DNB ASA upgraded the shares to buy from hold, saying earnings growth at the second-largest truckmaker will become stronger in the second half of 2014.

Swedish Match fell 5.5 percent to 196.60 kronor. Citigroup Inc. downgraded the shares to sell from neutral, citing competitive pressures in 2014. The brokerage reduced its price forecast for the shares to 193 kronor from 225 kronor.

Hugo Boss slid 2.3 percent to 100 euros. Societe Generale SA downgraded the the luxury-clothing maker controlled by buyout firm Permira Advisers LLP. to hold from buy.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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