European stocks climbed, completing their first weekly rally of 2014, as investors weighed data that showed the U.S. unemployment rate unexpectedly fell in December while hiring slowed.
Swatch Group AG advanced the most in 11 months after forecasting “dynamic growth” in 2014. Metro AG gained 2.8 percent as a report that was later denied claimed the retailer’s biggest shareholder may push for selling some units. Brenntag AG fell 2.4 percent after UBS AG downgraded the shares.
The Stoxx Europe 600 Index advanced 0.5 percent to 329.95 at the close of trading, extending its highest level since May 2008. The benchmark rose 0.7 percent this week as data on German unemployment and U.S. private jobs beat estimates.
“Investors want to see a U.S. recovery, but not too much,” said Jacques Porta, who helps manage $780 million as a fund manager at Ofi Gestion Privee in Paris. “Investors appreciate the drop in the jobless rate. At the same time, if the weak payrolls numbers continue, that may mean the Fed is not going to accelerate its tapering program.”
Labor Department data showed the U.S. unemployment rate unexpectedly dropped to 6.7 percent in December, the lowest since October 2008, as more people left the labor force. The report also showed U.S. employers hired the fewest number of workers since January 2011. The 74,000 gain in payrolls, less than the most pessimistic projection in a Bloomberg survey, followed a revised 241,000 advance the prior month.
Trading volumes increased this week. The average daily volume on the Stoxx 600, across all exchanges, was 15 percent higher than the average of the past 12 months, according to data compiled by Bloomberg.
The Federal Reserve, which is trimming the pace of its bond purchases this month, may reduce them by $10 billion in each of its next seven meetings and end the program in December 2014, according to the median forecast of economists in a Bloomberg survey last month.
Swatch gained 3.6 percent to 569 Swiss francs. The biggest maker of Swiss watches, which will release 2013 earnings on Feb. 20, said revenue rose 8.3 percent last year.
“Based on the strong start by all brands in the first few days of January, dynamic growth is expected for the entire year 2014,” Swatch said in a statement. “The group expects good results for 2013 at operating-profit and net-income level.”
Metro increased 2.8 percent to 34.95 euros. The retailer’s biggest shareholder, Franz Haniel & Cie., dismissed a report that it may push for its breakup as “outrageous nonsense.” Franz Haniel, which owns a 30 percent stake, may ask Metro to sell its Real, Kaufhof or Media-Saturn units, Platow Brief wrote without citing anyone.
A report showed French industrial production expanded 1.3 percent in November, beating the 0.4 percent increase predicted by economists in a Bloomberg survey. Cie. de Saint-Gobain SA, Europe’s largest supplier of building materials, added 3.1 percent to 40.37 euros. Vallourec SA, a maker of steel pipes for the oil and gas industry, rose 3 percent to 40.62 euros.
Deutsche Lufthansa AG jumped 8.9 percent to 17.35 euros, its biggest rally since November 2008. Europe’s second-biggest airline said it expects costs per passenger to drop by 2 percent this year. It also forecast fuel expenses of 6.9 billion euros ($9.4 billion), 200 million euros less than the 2013 estimate.
Separately, Credit Suisse Group AG raised its 12-month price forecast on the shares to 19.50 euros from 17.15 euros.
Red Electrica Corp. rallied 3.8 percent to 52.60 euros, its highest price since it sold shares to the public in 1999. Morgan Stanley raised its rating on the Spanish power-grid operator to equal weight, similar to hold, from underweight. Analyst Carolina Dores wrote that a regulation for Red Electrica’s power-transmission assets was better than the brokerage expected for the company.
Tullow Oil Plc advanced 7.6 percent to 909.5 pence, its biggest rally since September 2011. A person familiar with the matter said Statoil ASA, Norway’s national oil company, has analyzed the London-listed oil-and-gas explorer as a potential takeover target.
Cap Gemini SA climbed 2.2 percent to 50.91 euros, its highest price since July 2007, after peer Infosys Ltd. raised its annual sales-growth forecast. India’s second-largest software exporter said revenue in dollar terms will increase between 11.5 percent and 12 percent in the year ending March 31, compared with its October forecast for growth of 9 percent to 10 percent.
Brenntag AG fell 2.4 percent to 126.70 euros. UBS AG lowered its recommendation on the shares to neutral from buy, saying it sees limited potential for further gains after last year’s rally. The world’s biggest distributor of chemicals soared 36 percent in 2013.
SES SA lost 1.2 percent to 23.51 euros and Eutelsat Communications SA dropped 2.6 percent to 21.92 euros. JPMorgan Chase & Co. downgraded the stocks to neutral from overweight, saying investors can find better buying opportunities later.
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