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European Stocks Post Weekly Gain, Hit Highest Since July

European stocks rose this week, pushing the Stoxx Europe 600 Index to the highest in more than six months, amid optimism the region’s finance ministers will approve a Greek rescue and U.S. economic data beat forecasts.

Cable & Wireless Worldwide Plc soared 37 percent as Vodafone Group Plc said it’s considering buying the telecommunications services provider. Nestle SA gained 4.1 percent after reporting earnings that exceeded analyst estimates. Cap Gemini SA jumped 14 percent after it forecast a higher operating-profit margin this year.

The Stoxx 600 added 1.8 percent to 265.93 this week, the highest daily close since July 22. The benchmark measure has rallied 24 percent from its low on Sept. 22 and 8.8 percent this year as investors speculated euro-area policy makers will contain the sovereign-debt crisis.

“I don’t think that Greece will default by any means,” said Ali Mahdavi, an equities trader at Newedge Group in London. “They have to save it in order to save the euro zone. The Greece situation will be resolved sooner rather than later. Now, with more positive news and also what we’ve had from the U.S., stocks have rallied back up.”

German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Greek Prime Minister Lucas Papademos expressed optimism that an agreement on Greece can be reached at a Feb. 20 meeting of the finance chiefs.

The ministers delayed the rescue package even after Greek Prime Minister Lucas Papademos won parliamentary approval on spending cuts.

U.S. Economy

A report showed the prospects for the world’s largest economy increased in January. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.4 percent after a revised 0.5 percent gain in December that was more than initially reported, the New York-based group said. The median forecast of economists surveyed by Bloomberg News called for an increase of 0.5 percent.

Claims for jobless benefits fell unexpectedly last week to the lowest level in four years, Labor Department figures showed on Feb. 16. Housing starts rose 1.5 percent, beating projections. A third report showed that manufacturing in the Philadelphia region expanded in February at the fastest pace in four months as new orders and sales picked up.

All but one of the 19 industry groups in the Stoxx 600 increased this week, led by a gauge of technology shares that gained 3.6 percent. An index of mining companies fell 1 percent.

National benchmark indexes rose in 15 of the 18 western-European markets. France’s CAC 40 Index added 2 percent. Germany’s DAX Index advanced 2.3 percent and the U.K.’s FTSE 100 Index increased 0.9 percent.

Moody’s Review

Moody’s Investors Service downgraded six euro-area countries on Feb. 13, including Spain, Portugal and Italy, and threatened to cut the top Aaa ratings of U.K. and France.

The ratings company also placed 17 banks and securities firms under review. UBS AG, Credit Suisse Group AG and Deutsche Bank AG are among lenders that may be downgraded.

In China, the central bank’s chief said the world’s second-largest economy will help the European Union end the debt crisis.

“China will always adhere to the principle of holding assets of EU sovereign debt,” People’s Bank of China Governor Zhou Xiaochuan said on Feb. 15. “We would participate in resolving the euro debt crisis,” he said.

Cable & Wireless, Nestle

Cable & Wireless Worldwide rose 37 percent after Vodafone, the world’s largest mobile-phone company, said it’s evaluating a bid for the telecommunications services provider.

Nestle, the world’s biggest food company, gained 4.1 percent after reporting 2011 sales growth that beat estimates and forecast higher earnings in 2012.

BNP Paribas SA rallied 5.2 percent as France’s largest bank posted a fourth-quarter net income of 765 million euros, beating the 587 million-euro average estimate of 10 analysts surveyed by Bloomberg.

Oriflame Cosmetics SA surged 18 percent after Chief Executive Officer Magnus Braennstroem said the company plans to “reverse the sales trend and return to growth with improved operating margin” in 2012.

Cap Gemini, France’s biggest computer-services company, rose 14 percent after it forecast higher operating-profit margin this year.

Spanish banks declined as the country’s stock market regulator lifted a six-month ban on short-selling of financial stocks.

Banco Santander SA fell 0.8 percent. Banco Bilbao Vizcaya Argentaria SA lost 3.4 percent. Bankia SA retreated 13 percent to the lowest price since it sold its shares to the public last year.

Of the 170 Stoxx 600 companies that have reported quarterly earnings since Jan. 9, as many as 75 have exceeded analysts’ estimates, compared with 84 that missed projections, according to data compiled by Bloomberg.

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