European Stocks Gain as U.S., China Manufacturing Expand

European Stocks Fall
Employees pass stock index prices displayed on electronic screens at the entrance to the Hellenic Stock Exchange in Athens. Photographer: Kostas Tsironis/Bloomberg

European stocks climbed the most in almost three weeks, erasing earlier losses, as reports showed manufacturing expanded more than forecast in the U.S. and China.

Oriflame Cosmetics SA gained 2.6 percent after Coty Inc. offered to buy Avon Products Inc. for $10 billion. Cookson Group Plc jumped 6 percent after the Sunday Times said the company may spin off a unit. Novo Nordisk A/S led a gauge of health-care companies to the largest increase since November, rallying 5.6 percent in Copenhagen.

The benchmark Stoxx Europe 600 Index advanced 1.5 percent to 267.16 at the close, the biggest gain since March 13. The measure erased losses in the final two hours of trading, after earlier dropping as much as 0.4 percent. The gauge climbed 7.7 percent in the first quarter, its best start to a year since 2006, boosted by the European Central Bank’s 1 trillion euros ($1.3 trillion) in loans to the region’s financial firms.

“Equity markets ended the first quarter well,” said Simon Denham, managing director of Capital Spreads in London. “That’s enough to make even the most skeptical of bulls mildly optimistic.”

National benchmark indexes advanced in 12 out of 18 western-European markets. France’s CAC 40 Index climbed 1.1 percent, the U.K.’s FTSE 100 Index rose 1.9 percent while Germany’s DAX Index rallied 1.6 percent.

Manufacturing in the U.S. expanded more than forecast in March. The Institute for Supply Management’s factory index climbed to 53.4 from 52.4 in February, data showed. Economists in a Bloomberg News survey had estimated an increase to 53. Readings above 50 signal growth.

China Economy

China’s Purchasing Managers’ Index compiled by the logistics federation and the National Bureau of Statistics rose to 53.1 in March from 51 in February.

The gauge, which was released yesterday, has a pattern of gaining each March. In contrast, a PMI from HSBC Holdings Plc and Markit Economics fell to a four-month low of 48.3, showing that manufacturing contracted and export orders declined.

European stocks declined last week as Standard & Poor’s said that Greece may have to restructure its debt again and an ECB policy maker said a bigger bailout package will not solve the fiscal crisis.

Finance ministers from the 17-member monetary union unveiled a package including 500 billion euros in fresh bailout funds on top of 300 billion euros already committed to rescue programs.

IMF Resources

Group of 20 nations that rebuffed German-led pleas for more aid in February will be asked to decide this month whether Europe has done enough to warrant increased resources from the International Monetary Fund. Euro-area finance ministers insisted at a meeting that ended on March 31 in Copenhagen that they’ve fulfilled their side of the bargain.

Germany’s central bank last week said it won’t accept bank bonds guaranteed by Ireland, Greece and Portugal as collateral, which “raised questions about policy cohesiveness” in the euro region, according to Moody’s Investors Services.

This is “a credit negative for euro-area sovereigns and banking systems overall, but particularly for those of Greece, Ireland and Portugal,” Alain Laurin from Moody’s wrote in the report today.

Oriflame paced advancing shares, gaining 2.6 percent to 261.50 kronor after Coty offered to buy Avon, a door-to-door cosmetics seller, for $23.25 a share in cash. Oriflame sells cosmetics at parties hosted in private homes.

Cookson, Novo Nordisk

Cookson surged 6 percent to 732.5 pence after the Sunday Times reported the world’s biggest maker of ceramic linings for metal smelters may spin off its electronics unit.

The manufacturer has hired Rothschild to devise a proposal for the unit to sell shares and list on the London Stock Exchange, the newspaper reported yesterday without saying where it got the information.

A gauge of health-care stocks was the best performing group among 19 industries on the Stoxx 600 Index.

Novo Nordisk jumped 5.6 percent to 815.50 kroner. The world’s biggest insulin maker said it will meet its 2014 target date to begin selling an obesity drug, Victoza, Copenhagen-based newspaper Borsen reported, citing an interview with Chief Science Officer Mads Krogsgaard Thomsen.

An advisory panel voted last week to recommend the U.S. Food and Drug Administration require heart studies for all diet pills.

Stada Arzneimittel AG gained 4.7 percent to 25.78 euros, Merck KGaA climbed 4.3 percent to 86.55 euros and UCB SA advanced 4.6 percent to 33.83 euros.

Mining Stocks Advance

A gauge of mining stocks was the second best-performer on the Stoxx 600 Index, led by U.K.-listed companies. Fresnillo Plc added 4.1 percent to 66 pence, Rio Tinto Group gained 3.2 percent to 110 pence and BHP Billiton Ltd. climbed 3 percent to 57.5 pence.

Peugeot SA dropped 3.3 percent to 11.68 euros and Renault SA lost 1.3 percent to 39.01 euros as French registrations of new cars and light vehicles declined 22 percent in March, the country’s carmakers association said.

Peugeot’s new car registrations sank 33 percent while Renault recorded a slide of 30 percent, the group said.

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