European stocks rose for a fourth day, pushing the Stoxx Europe 600 Index to its highest level in five months, as a report showed that manufacturing in the U.S. expanded in December at the fastest pace in six months.
BHP Billiton Ltd. and Rio Tinto Group jumped more than 6 percent, leading gains by commodity producers as copper increased in London. Automakers rallied as R.L. Polk & Co. said the number of cars and light trucks sold globally will grow 6.7 percent this year.
The benchmark Stoxx 600 rose 1.6 percent to 251.06 at the close, its highest level since Aug. 3. The gauge has risen for four days, its longest winning streak since November. The U.K., the U.S. and Swiss markets were closed for a holiday yesterday.
“The new year has bearish expectations for growth baked in, providing an equity-buying opportunity for investors as growth improves later in the year,” said Daniel Weston, a portfolio adviser at Schroeder Equities GmbH in Munich. “The market will focus on improving growth increasing profits, low interest rates benefiting businesses and investors will see equity as a more attractive alternative than holding cash.”
The Stoxx 600 rallied 1.1 percent yesterday as a measure of German manufacturing beat estimates. The gauge posted its first yearly decline since 2008 last year as U.S. leaders wrangled over cutting the deficit and euro-area policy makers remained divided on their response to the sovereign-debt crisis.
European Budget Rules
National leaders have pledged to draft a stricter rulebook for controlling government spending. German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet in Berlin on Jan. 9 to work out the details.
The Institute for Supply Management’s factory index rose to 53.9 last month from 52.7 in November. That beat the median projection of 63 economists surveyed by Bloomberg News before the report. Fifty is the dividing line between growth and contraction. Construction spending in the world’s largest economy increased in November, another report today showed.
A separate report on Jan. 6 will probably show that hiring in the U.S. accelerated in December for a second month, a sign that the country’s improving labor market will bolster consumer spending in early 2012, economists said. Payrolls climbed by 150,000 workers after rising 120,000 in November, according to the median forecast of 62 economists in a Bloomberg News survey before the Labor Department release on Jan. 6.
“U.S. data has continued to impress and markets are expecting the trend to persist,” Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a research note today.
European Debt Sales
France sold 84-, 161- and 315-day treasury bills today. The 10-year yield increased four basis points to 3.28 percent as of 2:05 p.m. London time, rising for a fifth consecutive day. Two-year yields added two basis points to 0.87 percent.
German unemployment fell in December more than economists had forecast as exports of cars and machinery boomed and one of the mildest winters on record helped support jobs in construction.
“The main focus is that there will be no recession,” said Robert Halver, head of research at Baader Bank AG in Frankfurt. “It can be a good year for equities under the condition that European politicians do their homework. The European Central Bank is in the driving seat.”
National benchmark indexes advanced in every western-European market except Greece. Germany’s DAX Index added 1.5 percent, while the U.K.’s FTSE 100 Index climbed 2.3 percent. France’s CAC 40 Index gained 0.7 percent.
BHP Billiton, the world’s biggest mining company, surged 6.2 percent to 1,993 pence, while Rio Tinto, the second-largest, soared 6.4 percent to 3,325 pence. Copper, lead, nickel, tin and zinc advanced on the London Metal Exchange.
Global Auto Sales
Carmakers posted the second-best performance of the 19 industry groups on the Stoxx 600 as Polk, a research company based in Southfield, Michigan, predicted that the industry’s sales will rise to 77.7 million vehicles this year, helped by a 16 percent gain in China to 17.9 million.
Bayerische Motoren Werke AG rose 4 percent to 55.29 euros as Sueddeutsche Zeitung said the world’s biggest maker of luxury cars expects the automotive market to remain stable in 2012, with growth opportunities in the U.S. and China.
Afren Plc soared 20 percent to 103.2 pence, its largest increase since April 2009 and the best performance in the Stoxx 600 today. The U.K. oil and gas explorer focused on Africa said its aggregate production has reached 55,400 barrels of oil equivalent per day, exceeding its year-end target of 50,000 barrels.
Lagardere SCA jumped 4.6 percent to 22.01 euros after Qatar Holding LLC said it will seek a seat on the French media company’s supervisory board. Qatar Holding, which owns 10.07 percent of Lagardere’s shares, said it may also raise its stake in the company though it will not seek management control of the owner of the Europe 1 radio station.
Adecco SA increased 5 percent to 41.30 Swiss francs. The company said it has agreed to buy VSN Inc., a provider of professional staffing services in Japan, for an enterprise value of 90 million euros. VSN doubles Adecco’s exposure to professional staffing in Japan and reinforces the company’s strong position in an attractive structural growth market, it said in a statement.
Sky Deutschland AG jumped 14 percent to 1.64 euros, its biggest gain in a year, as the German pay-television operator was raised to “buy” at Royal Bank of Scotland Group Plc.
Royal KPN NV dropped 2.6 percent to 9.08 euros, its first retreat in four days. The company said Chief Financial Officer Carla Smits-Nusteling will step down because she failed to agree with a new management structure.
Storebrand ASA tumbled 6.7 percent to 28 kroner after the Norwegian insurance company was downgraded to “underperform” from “market perform” at Keefe, Bruyette & Woods Inc.