European stocks climbed the most in two weeks, paring the biggest weekly drop this year, as U.S. payrolls and manufacturing growth increased in January and BT Group Plc reported earnings that beat analysts’ estimates.
BT Group, Britain’s largest fixed-line phone company, rallied 6.5 percent to a five-year high. Banca Popolare di Milano Scarl surged 9.6 percent on a report the Italian lender may become a joint stock company. Electrolux AB fell the most in 17 months after posting profit that trailed analysts’ forecasts. Spain’s IBEX 35 slid 1.6 percent as regulators lifted a six-month ban on short selling.
The Stoxx Europe 600 Index rose 0.3 percent to 288.2 at the close of trading. That’s the biggest advance since Jan. 17 and pares this week’s decline to 0.5 percent. The gauge climbed 2.7 percent in January for the biggest monthly gain since July as U.S. lawmakers agreed on a compromise budget to avoid spending cuts and tax increases that threatened to push the world’s largest economy into a recession.
“The payrolls numbers seem to confirm the healthy-but-gradual recovery in U.S. employment,” said Pierre Mouton, who helps oversee $6 billion as a fund manager at Notz Stucki & Cie. in Geneva. “If we add the prior numbers that were revised with January’s numbers, we end up with a positive surprise for the increase over the last two months.”
A U.S. Labor Department release showed employers added 157,000 workers to payrolls in January. A Bloomberg survey of 90 economists had called for a reading of 165,000. Revisions added a total of 127,000 jobs in November and December.
American manufacturing expanded at a faster pace last month. The Institute for Supply Management’s factory index rose to 53.1 in January from 50.2 in December, the Tempe, Arizona-based group said today. Economists in a Bloomberg survey had projected a reading of 50.7, according to the median of 86 forecasts.
National benchmark indexes advanced in 13 of the 18 western European markets. The U.K.’s FTSE 100 and France’s CAC 40 rose 1.1 percent. Germany’s DAX added 0.7 percent.
The volume of shares changing hands on the Stoxx 600 was 24 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
BT Group rose 6.5 percent to 264.8 pence, the highest price since February 2008, after the U.K.’s biggest fixed-line phone company posted third-quarter adjusted earnings before interest, taxes, depreciation and amortization of 1.55 billion pounds ($2.46 billion). That compared with the average analyst estimate for profit of 1.53 billion pounds.
Earnings at companies in the Stoxx 600 will grow 0.3 percent in 2012, estimates compiled by Bloomberg show. About 56 percent of western European companies that have reported since Jan. 8 exceeded profit projections, Bloomberg data show.
Banca Popolare di Milano gained 9.6 percent to 54.2 euro cents as Repubblica said the lender may become a joint stock company. Chairman Andrea Bonomi presented the plans to unions and aims to complete the restructuring by October, the newspaper reported, without citing anyone.
The Milan-based bank said in a statement it’s “premature” to predict the outcome of the corporate review.
QinetiQ Group Plc, the military researcher split off from the U.K. government, advanced 5.1 percent to 197.6 pence. The company said the Ministry of Defence will pay it 998 million pounds across the third five-year term of a 25-year contract for test, evaluation and training support services.
Afren Plc soared 7.4 percent to 154 pence after people with knowledge of the matter said China Petrochemical Corp. is in talks to buy more than $1 billion of assets from the company.
Santander SA, Spain’s largest bank, lost 2.3 percent to 6.04 euros as the nation’s market regulator, CNMV, allowed short-selling restrictions on the country’s stocks to lapse.
Bankia SA retreated 12 percent to 45 euro cents. Fomento de Construccion & Contratas plunged 9.1 percent to 9.05 euros. Telefonica SA fell 1.9 percent to 10.48 euros and Iberdrola SA declined 3.1 percent to 3.85 euros.
Acciona SA plummeted 13 percent to 7.68 euros, the biggest drop since October 2008. Economista reported that Spain is considering ending the increase in renewable-energy subsidies given to compensate for inflation.
Electrolux plunged 7.9 percent to 154.7 kronor, the largest decline August 2011, after the world’s second-biggest appliance maker posted fourth-quarter net income of 291 million kronor ($45.9 million). That missed the average analyst estimate of 368 million kronor.
Tate & Lyle Plc slid 1.1 percent to 804 pence. The maker of low-calorie sweetener Splenda said it expects sucralose volumes for the full year to be slightly lower than the previous period.