Photographer: Martin Leissl/Bloomberg

European Stocks Rise With Banks After Best Quarter Since 2009

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Banks led European stocks higher after equities completed the biggest quarterly advance since 2009.

The Stoxx Europe 600 Index added 0.3 percent to 398.52 at the close of trading. It briefly erased almost all its gains after a report said Greece may seek to delay an April 9 deadline to repay loans to the International Monetary Fund. A Greek government official denied the report. The country’s ASE Index slid 1.3 percent for the worst performance among 18 western-European markets.

European shares earlier reversed a drop of as much as 0.5 percent after a final Markit Economics update showed euro-area manufacturing grew more than initially estimated. Stocks rallied 16 percent in the first quarter, with carmakers leading gains, as the European Central Bank began a quantitative-easing program and economic data beat forecasts by the most in two years.

“Data in Europe keeps on surprising us, and stronger growth is precisely what will drive markets higher from here,” said Didier Duret, who oversees the equivalent of $177 million at ABN Amro Bank NV’s wealth-management unit. “The economic landscape will continue to improve as all the positive shocks from the first quarter -- the ECB, the low euro, and low oil prices -- start feeding into the recovery now. This momentum will impact the banking sector positively.”

Banks contributed the most to the Stoxx 600’s gains. Barclays Plc climbed 2.8 percent after Morgan Stanley named it one of the most preferred European lenders, citing a focus on recovery in peripheral countries and potential dividend increases.

U.S. Economy

The Stoxx 600 pared an advance of as much as 0.9 percent after U.S. jobs data by the ADP Research Institute missed estimates. Another release showed a gauge of U.S. manufacturing also fell short of projections.

“Today’s disappointing U.S. employment data is demoralizing investors,” said Ramiro Loureiro, a Lisbon-based market analyst at Banco Comercial Portugues SA’s Millennium unit. “The figure was far lower than expected.”

Among stocks moving on corporate news, Barry Callebaut AG jumped 6.6 percent after the maker of bulk chocolate reported first-half earnings that beat estimates and forecast faster volume growth in the second half. Asos Plc climbed 2.7 percent after saying it is confident in the outlook for the second half of the year.

Shawbrook Group Plc rose 5.5 percent on its first day of trading after raising 90 million pounds ($133 million) in its initial public offering.

A gauge of technology shares posted the worst drop among Stoxx 600 industry groups. Neopost SA tumbled 6.8 percent after reporting annual profit that missed analysts’ projections.

William Demant Holding A/S lost 2.5 percent after UBS Group AG cut its rating on the shares to sell, citing long-term risks to sales growth.

The best-performing stocks of the first quarter fell on Tuesday, dragging the Stoxx 600 lower. The benchmark measure on March 20 came within 0.4 percent of a record reached in 2000, before declining 1.7 percent through yesterday’s close.

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