European stocks rose the most in seven weeks, with the Stoxx Europe 600 Index completing its first weekly gain this month, as German business confidence surged to a 10-month high.
Elan Corp. advanced 4.2 percent after announcing a share buyback. Valeo SA rallied to an 11-month high after reporting earnings that beat estimates. Volkswagen AG slumped the most since October 2011 after its operating-profit forecast for this year fell short of analyst estimates.
The Stoxx Europe 600 Index rose 1.3 percent to 288.57 in London, for a weekly increase of 0.4 percent. The gauge has jumped 3.2 percent so far this year as U.S. lawmakers agreed on a compromise budget.
“Germany is the anchor of Europe,” Tobias Britsch, who helps manage about 26 billion euros ($34 billion) as European equities asset manager at Meriten Investment Management GmbH, said by phone from Dusseldorf, Germany. “After yesterday when you saw investors getting more nervous and all blame was on Italian elections and on the suggestion the Fed may stop asset purchases, any pullback is definitely an opportunity to buy.”
The Ifo institute’s German business climate index, based on a survey of 7,000 executives, climbed to 107.4 in February from a revised 104.3 in January. The median of 38 forecasts in a Bloomberg News survey had called for an increase to 104.9. The latest reading was the highest since April.
The volume of shares changing hands in companies on the Stoxx 600 was 17 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
In Italy, voters head for general elections on Sunday amid concern the emergence of a populist government will derail the nation’s austerity program. Caretaker Prime Minister Mario Monti has failed to make headway in opinion polls, even as former premier Silvio Berlusconi and ex-comic Beppe Grillo gained popularity. Pier Luigi Bersani, the union-backed Democratic Party candidate, leads the table. Bersani and Monti have said they will form a coalition if necessary.
The European Commission predicted the euro-area economy will shrink in 2013, abandoning its earlier forecast for growth. Gross domestic product will drop 0.3 percent this year, the commission said. In November, it had projected a growth of 0.1 percent, which itself was lower than its estimate in May for 1 percent GDP growth.
National benchmark indexes rose in all of the 18 western European markets except Iceland. Germany’s DAX added 1 percent, while the U.K.’s FTSE 100 advanced 0.7 percent and France’s CAC 40 rallied 2.3 percent.
Elan Corp. gained 32 cents to 7.97 euros in Dublin. The drugmaker plans to buy back $1 billion of stock -- equal to about 16 percent of its market value based on yesterday’s close -- after selling its stake in the Tysabri multiple-sclerosis drug to Biogen Idec Inc.
Valeo gained 2.3 percent to 41.46 euros. France’s second-biggest car-parts maker said earnings before interest, taxes and one-time changes increased to 725 million euros in 2012 from 704 million euros the previous year. That beat the 686 million-euro average analyst estimate in a Bloomberg survey.
Fuchs Petrolub AG rose 5.9 percent to 60.38 euros, its highest price since at least October 1998. The maker of automotive lubricants reported 2012 net income that beat projections, while proposing a dividend of 1.28 euros per ordinary share and 1.30 euros per preferred share.
Tenaris SA, a producer of steel pipes for the oil and natural gas industry, jumped 3.8 percent to 15.70 euros. Chief Executive Officer Paolo Rocca said revenue will increase in the second quarter as weakness in North America is offset by sales in the rest of the world.
Preferred shares of Volkswagen dropped 7 percent to 163.80 euros. Europe’s largest automaker is targeting earnings before interest and taxes this year at the same level as the 11.5 billion euros earned in 2012. The average estimate of 14 analysts surveyed by Bloomberg calls for 2013 profit of 14 billion euros.
G4S Plc, a U.K. security provider, slipped 0.9 percent to 287.1 pence after HSBC Holdings Plc cut its rating on the stock to underweight, similar to a sell recommendation, from neutral.
“Manned security pricing is very weak in many developed markets, which makes cost recovery difficult and squeezes gross margins,” HSBC analyst Alex Magni wrote.
Finmeccanica SpA fell 4.1 percent to 3.83 euros, the lowest price in three months, as Italy’s biggest defense contractor said its annual earnings report, due March 12, may be delayed until April amid a bribery probe on the sale of 12 AW101 helicopters to India. The company also replaced executives including Bruno Spagnolini, the head of the AugustaWestland unit at the center of the investigation.
Drax Group Plc, the operator of the U.K.’s largest coal-fired power station, retreated 1.9 percent to 632 pence. Goldman Sachs Group Inc. downgraded its rating on the shares to sell from neutral, with analyst Andrew Mead saying the stock’s price doesn’t reflect risks from increasing carbon costs and biomass conversion.