European stocks posted their biggest weekly gain since St. Valentine’s Day as concern dissipated that the Ukraine crisis would lead to wide-ranging disruption to trade after a speech from Vladimir Putin.
Bayerische Motoren Werke AG rallied 12 percent after projecting that pretax profit will climb by at least a high single-digit percentage this year. Legal & General Group Plc slumped 9.6 percent as U.K. Chancellor of the Exchequer George Osborne scrapped rules forcing people to buy annuities with their pension funds.
The Stoxx Europe 600 Index rose 1.8 percent to 327.91 this week, paring its decline for the year to 0.1 percent, as Putin used an address to Russian lawmakers to allay concern that he would send troops into eastern Ukraine. The benchmark fell 4.7 percent in the first two weeks of March as the newly appointed prime minister of Crimea called a referendum to determine whether the region would leave Ukraine and join Russia.
“The absence of further escalation of the geopolitical crisis in Eastern Europe, and no signs of significant economic sanctions against Russia from Europe or the U.S. fueled a sense of relief in the markets this week,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Asset Management in Copenhagen, wrote in an e-mail.
The Russian president annexed Crimea after almost 97 percent of voters in a plebiscite on March 16 backed the region’s secession from Ukraine. The upper house of Russia’s parliament approved a treaty making Crimea part of Russia. The U.S. and European Union imposed sanctions on Russian and Crimean officials and threatened further measures.
European stocks briefly dropped after Federal Reserve Chair Janet Yellen said that U.S. interest rates could increase six months after the central bank’s monthly bond purchases come to an end. Speaking after chairing her first Federal Open Market Committee meeting, Yellen also said policy makers have stopped linking rates to an employment threshold.
“The Fed meeting didn’t make more than a small dent, since markets chose to interpret the relative hawkishness as a sign of confidence in the U.S. recovery rather than a potential policy mistake,” Bahrke said.
A gauge of U.S. industrial production released on March 17 rose 0.6 percent in February, following a revised 0.2 percent decline in January. Economists had predicted the Fed’s measure of output would climb 0.2 percent.
Benchmark indexes climbed in every western-European market except Denmark and Iceland this week. Germany’s DAX gained 3.2 percent, the U.K.’s FTSE 100 rose 0.4 percent and France’s CAC 40 rallied 2.8 percent.
BMW jumped 12 percent. The world’s biggest maker of luxury cars also said sales will accelerate in the second half of the year thanks to 16 new and refreshed models. A gauge of auto-related stocks posted the largest gain on the Stoxx 600.
PSA Peugeot Citroen advanced 5.7 percent. The French carmaker selected former Airbus Group NV Chief Executive Officer Louis Gallois to succeed Thierry Peugeot as the first-ever chairman from outside its founding family.
Inditex SA advanced 6.5 percent. The owner of the Zara clothing chain reported faster sales growth in the first six weeks of its financial year. Sales in local currencies rose 12 percent from Feb. 1 to March 15.
Deutsche Bank AG gained 4 percent. Germany’s biggest bank plans to cut more jobs to lower costs, according to two people with knowledge of the matter. The lender may reduce headcount in its corporate finance, capital markets and trading businesses, said the people, who asked not to be identified because the details aren’t public.
Hargreaves Lansdown Plc jumped 9.3 percent. The U.K.’s biggest retail broker rallied after Osborne enabled people with defined-contribution pension plans to invest their money in products other than annuities when they retire.
Legal & General slid 9.6 percent, while Resolution Ltd., the insurance buyout firm founded by Clive Cowdery, dropped 14 percent. Aviva Plc lost 5.3 percent.
Ladbrokes Plc and William Hill Plc, Britain’s two biggest bookmakers, tumbled 16 percent and 9.8 percent, respectively, after Osborne increased the duty on in-store gaming machines known as fixed-odds betting terminals.