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European Stocks Rise on Iran Accord as Air France Climbs

Frankfurt Stock Exchange
Financial traders monitor data on computer screens beneath a display of the DAX Index curve at the Frankfurt Stock Exchange in Frankfurt. Photographer: Ralph Orlowski/Bloomberg

European stocks advanced, after posting their first weekly loss since October, as Iran agreed to limit its nuclear program.

International Consolidated Airlines Group SA and Air France-KLM Group rose with a gauge of travel stocks as oil prices fell after Iran’s accord. PSA Peugeot Citroen gained 5.1 percent after people familiar with the matter said it will appoint a new chief executive officer. Fresenius Medical Care AG surged the most in five years after U.S. regulators scrapped a plan to cut Medicare payments next year.

The Stoxx Europe 600 Index advanced 0.4 percent to 324.18 at the close in London, 0.5 points away from its May 2008 high reached Nov. 18. The benchmark gauge slipped less than 0.1 percent last week, the first loss since Oct. 4. It has surged 16 percent this year as central banks around the world maintained stimulus measures.

“The negotiations with Iran have been going on for a while and now we’re seeing some progress,” said Veronika Pechlaner, who helps oversee about $2.3 billion as an investment manager at Jersey, Channel Islands-based Ashburton Ltd. “The long-term impact of the deal could be significant. Anything that takes pressure off of the consumer and could help accelerate a recovery could be seen as good news. We are seeing the seasonal period into Christmas, which is typically strong for markets.”

December Advance

The Stoxx 600 has climbed every December since 2009. The volume of shares changing hands in companies listed on the gauge was 21 percent below its 30-day average today, according to data compiled by Bloomberg.

Iran agreed to limit its nuclear program in exchange for as much as $7 billion in relief from economic sanctions over six months. Iran and the six countries it has entered a pact with -- the U.S., U.K., Germany, France, Russia and China -- aim to conclude a comprehensive deal during that time.

The accord is the first major breakthrough in the dispute over Iran’s nuclear program since 2003. Questions over the purpose of that plan had deepened the rift between Shiite and Sunni Muslims in the Middle East, sparked threats of military action by the U.S. and Israel, and raised concerns that the oil-rich region was heading for a nuclear arms race.

National benchmark indexes advanced in 15 of the 18 western European markets. The U.K.’s FTSE 100 climbed 0.3 percent, while France’s CAC 40 added 0.6 percent. Germany’s DAX jumped 0.9 percent.

In the U.S., the number of contracts Americans signed to buy previously-owned homes unexpectedly fell in October for a fifth consecutive month. An index of pending home sales decreased 0.6 percent in October, following a revised 4.6 percent drop a month earlier, data from the National Association of Realtors showed. The median forecast of economists in a Bloomberg survey had called for a gain of 1 percent.

Travel Companies

A gauge of travel and leisure companies gained 1.6 percent for the biggest jump among 19 industry groups in the Stoxx 600. Brent crude futures fell as much as 2.7 percent today. IAG, the parent of British Airways, climbed 2.8 percent to 372.8 pence and Air France advanced 1.9 percent to 7.64 euros.

Peugeot gained 5.1 percent to 10.75 euros after two people familiar with the matter said the board approved hiring former Renault SA Chief Operating Officer Carlos Tavares to replace Philippe Varin as CEO. Varin, 61, plans to step down next year. Europe’s second-largest carmaker is also likely to benefit from the Iran accord. Peugeot sold 458,000 vehicles in Iran in 2011, before the trade sanctions, making it the company’s second-biggest market after France.

Renault, which sold more than 100,000 vehicles in Iran in 2012, added 1.4 percent to 65.33 euros.

Medicare Payments

Fresenius Medical Care, the world’s biggest provider of kidney dialysis, jumped 7 percent to 51.19 euros, the largest gain since November 2008. Medicare & Medicaid Services issued a final rule on Nov. 22 that keeps payments to companies including Fresenius Medical Care unchanged for 2014. The original proposal was for a 9.4 percent cut.

Fresenius SE, which owns a 31 percent stake in the dialysis provider, climbed 3.8 percent to 102.60 euros.

Novartis AG advanced 0.8 percent to 72.75 Swiss francs after Natixis upgraded the shares to buy from neutral. The drugmaker’s progress in research for a breast-cancer treatment and the $5 billion share buyback announced last week will result in higher earnings, the brokerage said in a note.

Banco Popolare SC declined 4.2 percent to 1.28 euros and Unione di Banche Italiane SCPA slid 3.1 percent to 4.88 euros after Societe Generale SA reduced its 12-month price forecast on the shares. Banca Monte dei Paschi di Siena SpA slipped 7.5 percent to 20 euro cents for the biggest decline in the Stoxx 600, data compiled by Bloomberg show.

The French brokerage estimated that Italian banks will need 44 billion euros more in provisions for their bad loans. Italian lenders’ non-performing loans as a proportion of lending rose in September to the highest level since November 1999, according to data published by the Italian Banking Association on Nov. 19.

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