European stocks gained for a third day, posting a second weekly gain, as a report showed the U.S. economy added more jobs than economists had estimated.
Bayerische Motoren Werke AG and Daimler AG led gains in European carmakers, climbing more than 1 percent. Rio Tinto Group and Xstrata Plc advanced with metal prices.
The Stoxx Europe 600 Index added 0.8 percent to 231.99 at the 4:30 p.m. close in London. The benchmark measure posted a weekly rally of 2.6 percent amid speculation policy makers will agree to shield banks from the crisis and as the Bank of England expanded its bond-purchase program. The gauge has still retreated 20 percent since this year’s high on Feb. 17 and is trading at 9.8 times its companies’ estimated earnings, near the lowest since March 2009.
“U.S. payrolls are a very positive surprise,” said Matthias Jasper, head of equities at WGZ Bank AG in Dusseldorf. “The market has been oversold in the last few weeks and we have a combination of tailwinds from the European Central Bank’s comments yesterday to the payrolls today, which are the big cherry on the cake. A recession is getting more and more unlikely.”
European stocks gained as a U.S. report showed employers added more jobs than forecast in September and revised up hiring in the previous two months. The release also showed hours and earnings increased, helping ease concerns the U.S. labor market is deteriorating.
U.S. Payrolls, Unemployment
Payrolls climbed by 103,000 workers after a revised 57,000 increase in August that was more than originally estimated, Labor Department data showed. The median forecast in a Bloomberg News survey called for an increase of 60,000. The gain reflected the return to work of 45,000 telecommunications employees. The jobless rate held at 9.1 percent.
The ECB said yesterday it will reintroduce yearlong loans, giving banks access to unlimited cash through January 2013. The central bank will also resume purchases of covered bonds to encourage lending. At the same time, the European Commission is pushing for a coordinated capital injection into banks and German Chancellor Angela Merkel said policy makers “shouldn’t hesitate” if it turns out financial institutions are undercapitalized.
National benchmark indexes climbed in 12 of the 18 western-European markets. Germany’s DAX Index climbed 0.5 percent and the U.K.’s FTSE 100 Index gained 0.2 percent. France’s CAC 40 Index increased 0.7 percent.
BMW and Daimler, the world’s biggest makers of luxury cars, jumped 4.1 percent to 50.89 euros and 1.3 percent to 33.98 euros, respectively. Carmakers posted the second-largest performance in the Stoxx 600, gaining 1.7 percent.
Continental AG surged 4.9 percent to 46.91 euros as the world’s fourth-largest tiremaker plans to spend more than $500 million to build a new tire factory at Sumter, South Carolina, to meet increasing demand.
Rio Tinto, the world’s second-largest mining company, rose 1.2 percent to 3,164 pence, while Xstrata Plc climbed 2.7 percent to 910 pence. Copper, lead, tin and zinc all rose on the London Metal Exchange.
Total SA, Europe’s third-largest oil producer, rose 2.9 percent to 35.33 euros as crude oil increased for a third day in New York.
JCDecaux SA rose 2.5 percent to 18.92 euros as the French outdoor-advertising company may exceed its third-quarter forecast for organic revenue growth, Kepler said after meeting with the company.
RBS, Lloyds Decline
RBS and Lloyds Banking Group Plc slid 3 percent to 23.62 pence and 3.4 percent to 34.66 pence, respectively. Moody’s cut the senior debt and deposit ratings of 12 U.K. financial institutions as the likelihood of government support in a crisis lessens.
Lloyds TSB Bank Plc and Co-Operative Bank Plc had their ratings lowered one step by Moody’s, while RBS Plc and Nationwide Building Society were cut two levels.
Veolia Environnement SA dropped 1.7 percent to 10.72 euros after the world’s biggest water company was downgraded to “sell” from “neutral” at UBS AG, which said the longer term consensus is “overly optimistic.”
Holcim Ltd. declined 5 percent to 51.55 Swiss francs in Zurich trading after the cement maker said Thomas Schmidheiny’s Schweizerische Cement-Industrie AG raised its stake in Holcim to more than 20 percent. The shares had rallied 11 percent over the previous four days.
Premier Foods Plc slumped 42 percent to 5.8 pence, the lowest price and the largest drop since its 2004 initial public offering. The U.K.’s biggest food manufacturer said third-quarter sales fell “significantly below” management’s forecasts, dropping 3.6 percent to 477 million pounds ($745 million). The maker of Branston pickle also said full-year profit will miss analysts’ estimates.