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European Stocks Advance on German Confidence, Spanish Debt Sale

Updated on
Cooling Towers At An EON AG Nuclear Power Plant
EON AG lost 1.9 percent after Germany’s biggest utility said it will book an impairment charge of about 3 billion euros ($4 billion) this year. Photographer: Timothy Fadek/Bloomberg

European stocks climbed, rebounding from their biggest slide in three weeks, as Spain sold more securities than it had planned at a debt auction and a report showed that investor confidence in Germany improved.

Royal Dutch Shell Plc and BP Plc gained more than 1.5 percent, dragging a gauge of oil producers higher. Banks and insurers limited gains on the Stoxx 600 with Banco Santander SA and BNP Paribas SA, the largest lenders in Spain and France, respectively, dropping at least 1.5 percent.

The Stoxx Europe 600 Index rose 0.5 percent to 237.30 at the close. The gauge pared an advance of as much as 1.2 percent as Reuters reported that German Chancellor Angela Merkel has rejected increasing the upper limit for the funds held by Europe’s planned permanent rescue facility, citing sources in Merkel’s ruling coalition. The gauge has still declined 14 percent this year amid concern the euro area’s sovereign-debt debt crisis will derail the global economic recovery.

“Demand is obviously not declining as strongly as observers might have thought after the significant drops of orders in the third quarter,” said Ulrike Rondorf, an economist at Commerzbank AG in Frankfurt. “This eases fears that the German economy is hit by an uncertainty shock similar to 2008. However, we do not believe that the ZEW will swing onto an upward trend soon.”

National benchmark indexes climbed in 11 of the 18 western-European markets. France’s CAC 40 Index slid 0.4 percent and Germany’s DAX Index lost 0.2 percent. The U.K.’s FTSE 100 Index advanced 1.2 percent.

German Investor Confidence

The ZEW Center for European Economic Research said that its index of German investor and analyst expectations, which aims to predict developments six months in advance, posted a reading of minus 53.8 in December. That was better than the median estimate of economists in a Bloomberg News survey.

Spain sold 4.94 billion euros ($6.5 billion) of 12- and 18-month bills, the Bank of Spain said, compared with the maximum target of 4.25 billion euros the Treasury set for the sale.

A U.S. Commerce Department report showed that retail sales in the world’s largest economy increased 0.2 percent in November, a slower pace than the 0.6 percent rate that economists had predicted.

Federal Reserve Chairman Ben S. Bernanke and his policy-making colleagues meet today to discuss the outlook for an economy that has strengthened since their November gathering, lowering the jobless rate to 8.6 percent from 9 percent. The Federal Open Market Committee will release a statement at about 2:15 p.m. Washington time.

Dec. 9 Accord

Moody’s Investors Service said yesterday that it will review the ratings of European Union nations because Dec. 9’s summit accord produced few new measures to tackle the debt crisis. The region’s leaders agreed at the meeting in Brussels to channel 200 billion euros through the International Monetary Fund to increase the resources available for future bailouts.

Fitch Ratings, without taking any action, said after the close of European trading yesterday that the summit did little to ease pressure on Europe’s sovereign-bond ratings.

“We’re in a situation that needs more time to be solved,” said Philipp Musil, who helps manage about $11 billion at Semper Constantia Privatbank AG in Vienna. “Politicians have to set up the right framework and the right rules. We need big decisions.”

Oil Companies Rally

Shell rose 2.1 percent to 2,308.5 pence and BP advanced 1.7 percent to 452.25 pence. The companies are Europe’s two largest oil producers. Crude oil briefly surged above $100 a barrel.

Santander retreated 1.5 percent to 5.64 euros and BNP Paribas lost 2.5 percent to 30.09 euros, following the report that Merkel will keep the current cap on the European Stability Mechanism, which comes into force in the middle of next year.

Commerzbank AG sank 4.6 percent to 1.17 euros after Germany’s Finance Ministry denied a Reuters report that it’s in talks with the country’s second-largest lender to offer state assistance, saying that communication between the government and the bank doesn’t go beyond the “exchange of information.”

Lagardere SCA added 3.3 percent to 18.90 euros in Paris after Deutsche Bank upgraded the publisher to “buy” from “hold.”

Kabel Deutschland Holding AG increased 4.4 percent to 40 euros. Earlier, Manager Magazin reported that the German Cartel Office had allowed Liberty Global Inc. to buy Kabel Baden-Wuerttemberg. The Cartel Office subsequently denied it had approved the deal.

K+S AG added 2.4 percent to 34.59 euros as Vale SA, the world’s second-biggest mining company by market value, paid 2.08 billion reais ($1.1 billion) to increase its stake in fertilizer producer Vale Fertilizantes SA amid strong growth in agriculture.

Whitbread Plc slid 3.9 percent to 1,514 pence for its biggest drop since March. The owner of Premier Inn and Costa Coffee shops reported a slowdown in revenue growth as the U.K. hotel market weakened.

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