European stocks climbed for the fourth time in five days as U.S. employment and growth data exceeded forecasts and German lawmakers backed an enhanced euro-region rescue fund.
BNP Paribas SA and Deutsche Bank AG led gains in banking shares, rallying more than 3 percent. Hennes & Mauritz AB surged 6.8 percent after Europe’s second-largest clothing retailer reported earnings that beat estimates. Swatch Group AG led luxury-goods makers lower as a Bloomberg survey showed most global investors predict Chinese growth will slow to less than 5 percent by 2016.
The Stoxx Europe 600 Index climbed 0.7 percent to 228.9 at the 4:30 p.m. close in London after swinging between gains and losses at least 15 times. The measure is heading for its worst quarter since 2008, having fallen 16 percent amid concern global economic growth is slowing and policy makers are struggling to contain the European debt crisis. The gauge has dropped 3.6 percent this month following a 10 percent slump in August.
“U.S. data is providing a positive surprise to support a bounce in stocks,” said Daniel Weston, a portfolio adviser at Schroeder Equities GmbH in Munich. “Europe is showing glimmers of hope for political certainty.”
National benchmark indexes climbed in 16 of the 18 western European markets. Germany’s DAX and France’s CAC 40 advanced 1.1 percent. The U.K.’s FTSE 100 declined 0.4 percent as mining companies fell.
A report today showed a revised 1.3 percent increase in U.S. gross domestic product in the second quarter, compared with a 1 percent gain previously calculated. The median forecast of economists surveyed by Bloomberg News was for 1.2 percent growth, following a 0.4 percent increase in the first three months of the year.
Applications for jobless benefits dropped by 37,000 in the week ended Sept. 24 to 391,000, the fewest since April, Labor Department figures showed. Economists had forecast 420,000 claims, according to the median estimate in a Bloomberg survey.
Germany’s lower house of parliament approved the expansion of the European Financial Stability Facility’s firepower today. Lawmakers in the Bundestag voted 523 in favor of the measure, while 85 voted against; three abstained. The legislation, which raises Germany’s guarantees to 211 billion euros ($287 billion) from 123 billion euros, is set to be debated and set to a non-binding vote in the upper house tomorrow.
“Policy makers will eventually be able to engineer an ‘orderly’ Greek default and the euro will survive,” Michala Marcussen, the Paris-based global head of economics at Societe Generale SA, wrote in a report today. “The economic costs of the alternatives are simply too high. This will require further steps down the road to fiscal federalism.”
Even so, global investors anticipate Europe’s debt crisis leading to an economic slump, a financial meltdown and social unrest in the next year, with 72 percent predicting a country abandoning the euro as a currency within five years, a Bloomberg survey found.
About three-quarters of those questioned this week said the euro-area economy will fall into recession during the next 12 months and 53 percent said turmoil will worsen in a banking industry laden with government bonds, according to the quarterly Global Poll of 1,031 investors, analysts and traders who are Bloomberg subscribers. Forty percent see the 17-nation currency bloc losing at least one member in the next year.
Europe’s woes have reignited as Greece attempts to stave off default and spars with its European Union partners over whether it deserves the next tranche of aid next month. Euro-area lawmakers are also taking their time implementing a July overhaul of their rescue fund to give it more crisis-fighting tools, while investors question the ability of banks to withstand further market unrest as signs also mount that the economy is losing momentum.
“There’s no benefit in trying to be a hero, so most people are going to stay on the sidelines until they see some clarity,” Fred Goodwin, a strategist at State Street Bank & Trust Co., said in a Bloomberg Radio interview from London. “The market is going to wait to see the dust settle. We really are talking about systemic risk to the banking sector.”
Italian and Spanish financial market regulators extended bans on short selling of financial shares that were introduced last month in a bid to stem market volatility. The Spanish ban will remain “until the market conditions allow it” to be lifted, the country’s financial regulator said late yesterday. Italy’s restriction, and another enacted by France in August, will both last until Nov. 11.
BNP Paribas, France’s biggest bank, rallied 5 percent to 31.14 euros and Deutsche Bank AG, Germany’s largest, climbed 3.9 percent to 28.25 euros. UBS, Switzerland’s biggest bank, advanced 2.6 percent to 11.30 francs. Banking and insurance shares were the best performers in the Stoxx 600 today, climbing 2.5 percent each. ING Groep NV soared 7.4 percent to 5.74 euros and Allianz SE gained 4 percent to 72.5 pence.
H&M advanced 6.8 percent to 209.20 kronor, a two-month high. Operating profit fell 17 percent to 4.71 billion kronor ($700 million) in the three months ended Aug. 31, Stockholm-based H&M said today. The average of 17 analyst estimates compiled by Bloomberg was 4.35 billion kronor. The gross margin narrowed to 58.6 percent from 60.5 percent a year earlier, beating the 57.8 percent average estimate.
International Consolidated Airlines Group, the owner of British Airways and Iberia, rose 3.8 percent to 159.7 pence as JPMorgan Chase & Co. rated the shares “overweight” in new coverage.
Swatch, Burberry Drop
Swatch slumped 5.8 percent to 325 Swiss francs. Burberry Group Plc declined 8.3 percent to 1,201 pence. Luxury-goods makers fell as the Bloomberg survey showed most global investors predict Chinese growth will slow to less than half the pace sustained since the government began dismantling Mao Zedong’s communist economy three decades ago.
Mining companies retreated with base metals. Fresnillo Pc, the world’s largest primary silver producer, slid 4.5 percent to 1,514 pence. Rio Tinto Group, the second-biggest mining company, lost 3 percent to 2,966.5 pence.
Balda AG sank 5.6 percent to 5.52 euros after Handelsblatt said the German maker of plastic components fraudulently obtained subsidies of several million euros from Chinese authorities, citing a former Balda manager. Balda said its Chinese unit conducted itself in a correct and lawful manner and was entitled to subsidy payments.