European stocks rose to their highest level in six years as mining companies rallied, and a report showed builders started work on more houses in the U.S. last month than economists had forecast.
Glencore Xstrata Plc and Rio Tinto Group both climbed at least 1.5 percent, pushing a gauge of commodity producers to its biggest three-day gain since August. Accor SA rose 1.6 percent as Europe’s largest hotel operator said that 2013 profit probably reached the upper end of its forecast. Royal Dutch Shell Plc slipped after saying that higher exploration costs and lower volumes will hurt fourth-quarter earnings.
The Stoxx Europe 600 Index added 0.6 percent to 335.82 at the close. The equity benchmark has advanced 1.7 percent this week, its second consecutive weekly gain, as the World Bank raised its forecast for global growth in 2014 and 2015.
“European stocks are seeing a good start to the year,” Veronika Pechlaner, who helps oversee $2.3 billion as an investment manager at Jersey, Channel Islands-based Ashburton Ltd., said by phone. “There are high expectations for European earnings growth this year. Investors want to get the comfort that they’ll happen.”
Earnings for Stoxx 600 companies will climb 14 percent in 2014, according to analysts’ estimates compiled by Bloomberg. They fell 5 percent last year, the projections show. The volume of shares changing hands in companies listed on the benchmark was 31 percent greater than the average of the last 30 days, data compiled by Bloomberg shows.
A gauge of mining companies posted the best performance among the 19 industry groups in the Stoxx 600. Glencore Xstrata added 3.4 percent to 338.2 pence, while Rio Tinto, the world’s second-biggest commodity producer, climbed 1.5 percent to 3,383 pence.
A Commerce Department report showed U.S. housing starts fell 9.8 percent to a 999,000 annualized rate in December, from a revised 1.11 million in November. Economists in a Bloomberg survey had forecast a drop of 9.7 percent to a 985,000 pace.
The Thomson Reuters/University of Michigan index of consumer sentiment unexpectedly dropped to 80.4 this month from 82.5 in December, a preliminary report showed. Economists in a Bloomberg survey had projected a reading of 83.5.
National benchmark indexes gained in 15 of the 18 western-European markets. The U.K.’s FTSE 100 and CAC 40 each added 0.2 percent, while Germany’s DAX rose 0.3 percent. Sweden’s OMX Stockholm 30 Index climbed 0.6 percent to its highest level since September 2000. Boliden AB, a copper and zinc producer, gained 2 percent to 105 kronor.
Accor advanced 1.6 percent to 35.94 euros. Earnings before interest and taxes probably reached 530 million euros ($718 million) last year, the owner of the Sofitel hotel chain said. It had estimated Ebit of 510 million euros to 530 million euros.
Pandora A/S added 2.8 percent to 317.50 kroner after raising its sales and profit-margin forecasts for the second time in three months. The Danish maker of charm bracelets said revenue probably reached 9 billion kroner ($1.5 billion) last year. In October, it forecast sales of 8.6 billion kroner. The margin on earnings before interest, taxes, depreciation and amortization rose to 32 percent last year, Pandora said. It had predicted 30 percent.
PSA Peugeot Citroen rose 2.3 percent to 11.48 euros after people familiar with the matter said its board will meet on Jan. 19 to decide whether to accept investments of 500 million euros apiece from Dongfeng Motor Corp. and the French government. Peugeot would give both potential investors 10 percent of its stock, the people said.
DS Smith, Shell
DS Smith Plc (SMDS) gained 3.4 percent to 345.1 pence as Berenberg Bank initiated coverage of the stock with a buy rating. The brokerage said the maker of recycled paper has expanded its business with its purchase of Svenska Cellulosa AB’s packaging unit in 2012.
“DS Smith is now growing earnings and dividends at double-digit rates,” analysts Robert Chantry and Benjamin May wrote in a note.
Shell slipped 0.9 percent to 2,174.5 pence after Europe’s biggest oil producer forecast adjusted earnings excluding some items of $2.9 billion for the fourth quarter. Analysts had estimated $4.9 billion, according to a Bloomberg survey.
“Our 2013 performance was not what I expect from Shell,” Chief Executive Officer Ben van Beurden said in a statement.
Essilor International SA declined 2.4 percent to 79.38 euros after the maker of lenses for glasses said it expects full-year comparable sales growth excluding currency swings of 5.4 percent. The company had forecast growth of about 6 percent.
Ocado Group Plc slipped 3.5 percent to 505 pence. Deutsche Bank AG began coverage of the shares with a sell rating. The brokerage said the online grocer will find it difficult to expand into markets outside the U.K., while it may experience greater competition on price in its home market.
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