European stocks rose to a three-week high as the U.S. economy added more jobs than forecast and banks rallied after Ireland said it won’t force losses on senior bondholders following stress tests on its lenders.
Bank of Ireland Plc surged 39 percent as it outlined plans to avoid state control after being ordered to raise 5.2 billion euros ($7.4 billion) of capital. Barclays Plc climbed 4.3 percent as Ireland ruled out pressing senior bondholders to share the cost of rescuing its lenders. Logitech International SA sank the most since 2003 after cutting its forecasts.
The Stoxx Europe 600 Index rose 1.5 percent to 280.02 at the 4:30 p.m. close in London, bringing this week’s advance to 1.5 percent. The gauge has climbed 6.8 percent from this year’s low on March 16 amid speculation the economy will withstand the impact of Japan’s biggest earthquake on record and popular unrest in the Middle East and north Africa.
“The underlying picture of the global economy is still okay and that’s what the stock markets are reflecting,” said Patrik Scheuber, head of equities at Swisscanto Asset Management AG in Zurich, which oversees about $14 billion. “The market may even be a bit ahead of the fundamentals.”
U.S. employers added more jobs than forecast in March and the unemployment rate unexpectedly slid to a two-year low of 8.8 percent, a sign the labor-market recovery is gathering speed.
Payrolls increased by 216,000 workers after a revised 194,000 gain the prior month, the Labor Department said today. Economists had projected a March gain of 190,000, according to the median estimate in a Bloomberg News survey.
In China, manufacturing growth accelerated for the first time in four months in March, easing concern that monetary tightening may lead to a slowdown in the world’s second-biggest economy. A Purchasing Managers’ Index from the China Federation of Logistics and Purchasing rose to 53.4 from 52.2 in February. A separate PMI by HSBC Holdings Plc also gained.
The data indicate Premier Wen Jiabao is succeeding in sustaining growth while cracking down on inflation that topped the government’s target in the first two months of this year.
Factory growth from Germany and Switzerland to the U.K. slowed last month as the region’s recovery struggled to keep momentum, leaving the global economy reliant on emerging markets to drive expansion.
National benchmark indexes gained in all of the 18 western European markets, except Luxembourg and Greece. The U.K.’s FTSE 100 climbed 1.7 percent and France’s CAC 40 advanced 1.6 percent. Germany’s DAX increased 2 percent.
Bank of Ireland
Bank of Ireland rallied 39 percent to 30.5 euro cents, the biggest gain in two years, after the lender said it plans to turn to existing shareholders and capital markets for money.
Allied Irish Banks Plc, the largest lender during the nation’s decade-long economic boom, rose 8.3 percent to 20.5 cents after the central bank in Dublin said late yesterday it requires 13.3 billion euros of additional capital. Irish Life & Permanent Plc, which must raise 4 billion euros, plunged a record 58 percent to 17 cents as the government said it may take control of the company.
Ireland’s credit rating was cut one level to BBB+ by Standard & Poor’s and put on watch for a possible downgrade by Fitch Ratings after the cost of rescuing its banks reached as much as 100 billion euros.
A gauge of banks in the Stoxx 600 jumped 2.2 percent, its biggest advance since Feb. 16. Barclays, the U.K.’s third-largest lender, advanced 4.3 percent to 289.45 pence. Paris-based BNP Paribas SA increased 3.6 percent to 53.44 euros.
Ireland’s “announcement should support the outstanding senior bonds, despite the government’s aggressive rhetoric, and will leave sub-bondholders to take the biggest losses,” said Stefan Angele, head of investment management at Swiss & Global Asset Management Ltd. in Zurich, which oversaw about $90 billion for clients at the end of September 2010.
Deutsche Boerse AG dropped 1.4 percent to 52.81 euros after Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. made an unsolicited bid of about $11.3 billion for NYSE Euronext, trying to snatch the owner of the New York Stock Exchange away from the Germany bourse.
London Stock Exchange Group Plc shares climbed 2.8 percent to 855.5 pence, rising for the first time this week. Bolsas & Mercados Espanoles, operator of the Madrid bourse, jumped 5.9 percent to 22.73 euros.
Barry Callebaut AG, the world’s largest maker of bulk chocolate, climbed 3.7 percent to 778.5 Swiss francs after first-half profit rose 9.2 percent, helped by sales in emerging markets such as China and India.
Dufry Group, the owner of duty-free stores, rallied 7.9 percent to 114 francs.
“The management have been out on the road this week post full-year 2010 results and people seem to be buying into the long-term story again, which is probably giving the shares a lift,” Beat Keiser, an analyst at CA Cheuvreux, said by phone. “The degree of the bounce is a bit surprising to me given that consensus estimates have come down over the last week,” said Keiser, who said he has a “contrarian underperform” rating on the stock.
Logitech sank 16 percent to 13.95 francs after the maker of computer mice trimmed its sales and profit forecasts for the fiscal year.
3i Group Plc fell 4.4 percent to 285.8 pence, the biggest drop in 10 months, as the London-based private equity firm said its assets in the U.K. showed a “weaker performance” than elsewhere.