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European Stocks Climb; BHP Billiton, TomTom, Weir Group Gain

European stocks rose for a second day as higher commodity prices boosted raw-material producers and earnings reports provided evidence the economic recovery is strengthening.

BHP Billiton Ltd. and Xstrata Plc increased as metals prices rallied in London. TomTom NV soared the most since July after Europe’s biggest maker of portable navigation devices reported an unexpected profit. Weir Group Plc jumped to a 21-year high as the world’s largest maker of pumps for the mining industry increased its profit forecast.

The Stoxx Europe 600 Index gained 1 percent to 270.1, extending this year’s advance to 6.4 percent. The measure has rallied 71 percent from a 12-year low in March 2009 amid signs the global economy is recovering from the worst recession since World War II.

“We remain bullish,” JPMorgan Chase & Co.’s head of European equity strategy Mislav Matejka wrote in a report to clients today. “The recovery will prove sustainable.” He maintained an “overweight” stance on European stocks relative to U.S. equities.

Per-share earnings at western European companies have topped analysts’ estimates by an average of 14 percent since the U.S. earnings season began on April 12, according to data compiled by Bloomberg.

U.S. Earnings

In the U.S., earnings estimates for Standard & Poor’s 500 Index companies climbed 9.1 percent on average in April, twice the gain in their prices and the largest monthly increase since at least 2006, data compiled by Bloomberg show. The gauge is trading at 14.2 times forecasts for its companies’ profits, lower than any time since 1990, except for the six months after Lehman Brothers Holdings Inc. collapsed.

National benchmark indexes rose in all 18 western European markets, except Greece and Portugal. The U.K’s FTSE 100 gained 0.5 percent, while Germany’s DAX and France’s CAC 40 each climbed 1.2 percent.

Greece’s ASE Index plummeted 2.9 percent to a one-year low as the nation’s bonds tumbled, driving the premium investors demand to hold Greek 10-year notes rather than German bunds to a record 6 percentage points. National Bank of Greece SA, the country’s biggest lender, sank 3.6 percent to 11.11 euros.

Portugal’s PSI-20 Index slumped 3.2 percent, the most in 11 weeks, as credit-default swaps on the nation’s debt jumped to an all-time high of 318 basis points, according to CMA DataVision.

$60 Billion Bailout

Greece’s request for a $60 billion bailout doesn’t reduce the risk of default next year and a debt restructuring will be a “necessity” without even more aid, according to Evolution Securities Ltd. German Chancellor Angela Merkel said Greece needs to show its budget is on a “sustainable” path and a full German agreement to a bailout may take “a few days.”

BHP Billiton, the world’s largest mining company, climbed 2 percent to 2,151 pence. Xstrata gained 2.3 percent to 1,194 pence. Antofagasta Plc jumped 7.1 percent to 1,064 pence, the most in five months. Copper, lead, nickel, tin and zinc rose on the London Metal Exchange.

TomTom jumped 9.8 percent to 6.57 euros, the biggest gain since July 22. The company posted first-quarter net income of 2.9 million euros ($3.9 million), beating the average estimate of a loss of 8.4 million euros in a survey of five analysts by Bloomberg.

Weir soared 8.7 percent to 1,017 pence, the highest close since at least 1989. The company increased its full-year profit forecast after saying it performed better than expected in the first quarter.

Cookson Climbs

Cookson Group Plc rallied 6.8 percent to 607 pence after the world’s biggest maker of ceramic linings for metal smelters forecasted a rise in first-half profit of as much as 20 percent.

Chloride Group Plc surged 42 percent to 297 pence after Emerson Electric Co.’s renewed its offer for Britain’s largest maker of backup power equipment. The 723 million-pound ($1.12 billion) bid was rejected and Chloride said the company has “better prospects” alone and Emerson’s approach “continues to significantly undervalue the company.”

“Given the strategic value of the business, combined with the currency factors, we believe Emerson will have to raise its proposal and would therefore continue to hold on to the shares,” Jonathan Jackson, the head of equities at Killik & Co. wrote in a note to clients today.

Air Liquide Advances

Air Liquide SA increased 1.7 percent to 89.86 euros. The world’s biggest producer of industrial gases said first-quarter sales rose 5.2 percent to 3.15 billion euros, bolstered by demand in emerging markets and a recovery in electronics markets. The average estimate in a Bloomberg survey of 10 analysts was 3.08 billion euros in revenue.

Bank of Ireland Plc rallied 6.1 percent to 1.91 euros, erasing an earlier drop. The country’s biggest bank by market value plans to raise as much as 3.4 billion euros ($4.5 billion) to bolster capital as real-estate losses surge.

“There may be some disappointment at the dilution, but it’s well anticipated and overall the transaction terms look attractive,” said Sebastian Orsi, an analyst at Merrion Capital in Dublin.

Yara International ASA lost 5.6 percent to 211 kroner, the biggest decline in the Stoxx 600. The world’s largest supplier of mineral fertilizers was downgraded to “hold” fom “buy” at Deutsche Bank AG.

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