Europe Stocks Extend 23-Month High After ECB Loans Data

European stocks extended a 23-month high as German business confidence improved and European Central Bank data showed lenders will repay a greater amount of three-year loans than estimated.

Banca Monte dei Paschi di Siena SpA led banks higher, surging 11 percent, on a report the Bank of Italy may approve a bailout as soon as tomorrow. STMicroelectronics NV jumped 4.3 percent after Exane BNP Paribas upgraded the semiconductor maker. SolarWorld AG sank by a record after saying it needs to make “serious” adjustments to its debt structure.

The Stoxx Europe 600 Index advanced 0.3 percent to 289.72 at the close in London, extending the advance this week to 0.9 percent. The gauge has rallied 3.6 percent so far this year, on track for its longest stretch of monthly gains since July 1997 after U.S. lawmakers reached a budget compromise.

“I do feel hopeful for this year in that all the leading indicators across the globe are all picking up,” said Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about 4 billion pounds ($6.2 billion). “The market will move higher, it is still undervalued, and any pullback we view as a buying opportunity.”

The number of shares changing hands on companies listed on the Stoxx 600 was 33 percent higher than the average of the last 30 days, data compiled by Bloomberg showed.

German Sentiment

German business confidence climbed for a third month in January, adding to signs that Europe’s largest economy is recovering from a slump last year. The Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 104.2 from 102.4 in December, the highest since June.

The euro rose to its strongest level against the dollar in 11 months as the ECB said 278 banks will hand back 137.2 billion euros ($184.4 billion) next week, exceeding the 84 billion-euro forecast in a Bloomberg News survey.

National benchmark indexes advanced in 14 of the 18 western European markets. The U.K.’s FTSE 100 gained 0.3 percent, France’s CAC 40 added 0.7 percent and Germany’s DAX rose 1.4 percent.

Monte Paschi surged 11 percent to 25.98 euro cents, rising for the first time in six days, after the MF reported the the Bank of Italy may approve aid to the lender as soon as tomorrow. Finance Minster Vittorio Grilli will address parliament on the bank next week, the newspaper said without saying where it got the information.

Monte Paschi investors today approved a 6.5 billion-euro capital plan that is required for received a second bailout from the Italian government.

STMicroelectronics, Bayer

STMicroelectronics advanced 4.3 percent to 6.42 euros after Exane raised its recommendation for the semiconductor maker to outperform, similar to a buy rating, saying a partial sale of its wireless-chip venture with Ericsson AB is a most likely scenario.

Bayer AG led chemical makers higher. The stock climbed 4.8 percent to 75.92 euros, the highest price in at least 20 years, after Bank of America Corp. included the company on its list of top European stocks, citing confidence in its drug pipeline and agriculture unit.

Clariant AG gained 1.8 percent to 13.11 euros as Morgan Stanley raised its recommendation for the shares to overweight, the equivalent of a buy rating.

EasyJet Plc rose 5.2 percent to a record high of 945 pence after UBS AG upgraded the discount carrier to buy from neutral. The company yesterday reported a 9.2 percent jump in first-quarter sales.

SolarWorld Debt

SolarWorld sank 30 percent to 1.11 euros, for its biggest plunge since selling shares to the public in 1999, after Germany’s biggest solar-panel maker said late yesterday that a review of its earnings and financial planning by external advisers prompted management to take action to restructure its debt. SolarWorld reported net debt of 805.2 million euros as of the end of September.

Nokia Oyj dropped 6.6 percent to 3.08 euros, extending yesterday’s 5.5 percent selloff. Danske Bank A/S lowered its recommendation for the mobile-phone maker to sell from hold, saying the company’s low-end phone business has begun to deteriorate with demand falling quickly.

Separately, research from Strategy Analytics shows Samsung Electronics Co. and Apple Inc. held half the global smartphone market last year as shipments worldwide gained 43 percent.

Salzgitter AG fell 3 percent to 35.73 euros after analysts at Commerzbank AG and UBS AG downgraded Germany’s second-largest steelmaker to reduce and sell respectively.

UBS analyst Carsten Riek said the market is pricing in an unrealistic margin recovery and the risk to 2013 earnings merits a 58 percent cut in the bank’s pretax-profit estimate to 53 million euros.

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