European stocks climbed to their highest level since May 2008 as Rio Tinto Group and Boliden AB led mining companies higher and banks advanced.
Rio climbed 3.9 percent after saying it will spend $3 billion less than projected to increase iron-ore output capacity. Boliden added 4.8 percent as Morgan Stanley raised its rating on the stock. Thomas Cook Group Plc rose to the highest price since January 2011 after the travel operator posted a 49 percent increase in full-year earnings. British tobacco companies slipped after a U.K. minister announced the review of cigarette packaging.
The Stoxx Europe 600 Index advanced 0.4 percent to 325.19 at the close of trading in London. The gauge has added 0.9 percent in November, heading for a third consecutive monthly monthly advance.
“Investors are still bullish equity,” said James Butterfill, who helps manage about $50 billion as head of global equity strategy at Coutts & Co. in London. “Market sentiment will continue to improve as people’s outlook for corporate earnings in Europe picks up. Valuation multiples keep on expanding, and when you’re sitting on quite a good return year-to-date, you wonder if you should take profits now.”
The Stoxx 600 gained 16 percent in 2013 and trades at 15.2 times projected earnings, near the highest valuation since the end of 2009, data compiled by Bloomberg show.
U.S. equity and bond markets are closed today for the Thanksgiving holiday.
More than $8 billion have been added to global equity exchanges this year, the most since 2009, as central banks around the world pledged to continue supporting the economic recovery for as long as needed.
A European Commission report showed a gauge of economic confidence climbed for a seventh month to 98.5, exceeding the median economist forecast of 98. A separate report today confirmed that consumer confidence in the 17-nation euro area declined in November.
National benchmark indexes rose in 15 of the 18 western-European markets. The U.K.’s FTSE 100 increased 0.1 percent and France’s CAC 40 rose 0.2 percent. Germany’s DAX added 0.4 percent, extending a record.
Rio added 3.9 percent to 3,261 pence. The world’s second-biggest miner plans to increase annual iron-ore production capacity in Western Australia to 360 million metric tons by 2017, up from 290 million tons by the end of June next year, London-based Rio said in a statement.
Boliden, a Swedish copper and zinc producer, rose 4.8 percent to 95 kronor. Morgan Stanley raised its rating on the shares to overweight, similar to a buy recommendation, from equalweight, estimating that mining growth and increasing prices for copper refining will drive the shares higher.
Rio and Boliden’s jumps helped send the Stoxx 600 Basic Resource Index up 2.1 percent today for the biggest gain among 19 industry groups on the broader gauge.
Thomas Cook surged 15 percent to 175.7 pence, the most since March. Earnings before interest and taxes rose to 263 million pounds ($430 million) in the year ended Sept. 30 from last year’s 177 million pounds, according to a statement today.
A gauge of European banks listed on the Stoxx 600 rose 0.9 percent, the second-largest advance among 19 industry groups. Banco Comercial Portugues SA added 4.9 percent to 12.7 euro cents. Barclays Plc increased 1.2 percent to 265.6 pence, and Commerzbank AG advanced 2.1 percent to 10.77 euros.
Imperial Tobacco Group Plc retreated 1.9 percent to 2,316 pence and British American Tobacco Plc fell 0.7 percent to 3,250.5 pence. The U.K. government reversed its position on plain cigarette packs for the second time in four months. U.K. Health Minister Jane Ellison told BBC Radio 4 that the government is considering introducing plain packaging.
Kingfisher Plc declined 4.4 percent to 378.6 pence after Chief Executive Officer Ian Cheshire said consumer confidence in France “is still weak with no obvious signs of an imminent improvement.” Europe’s largest home-improvement retailer also reported same-store sales growth of 0.4 percent for its B&Q chain in the U.K. and Ireland, missing analysts’ estimates. France and the U.K. together accounted for about 81 percent of sales, data compiled by Bloomberg show.
U.K. homebuilders dropped after the Bank of England said it will end incentives for mortgage lending. Barratt Developments Plc fell 4.9 percent to 329.9 pence, paring a decline of as much as 10 percent. Persimmon Plc slipped 6.1 percent to 1,170 pence.
Compass Group Plc lost 1.8 percent to 922 pence after Citigroup Inc. cut its rating on the stock to neutral from buy. Shares of the world’s biggest catering company rallied 29 percent in 2013, compared with a gain of 13 percent for the U.K.’s FTSE 100 Index. The stock yesterday climbed to its highest price since the business was spun out of Granada Compass Plc in February 2001.