European Stocks Post Biggest Weekly Rally in Two Months

European stocks posted their biggest weekly advance in two months as employers in the U.S. increased their payrolls more than forecast and optimism mounted that central banks will continue to stimulate their economies.

Vodafone Group Plc posted its largest weekly gain since November 2008 after Verizon Communications Inc. was said to seek a resolution of their relationship. Fugro NV jumped after reporting earnings that beat analysts’ estimates. PSA Peugeot Citroen, Europe’s second-biggest carmaker, rallied.

The Stoxx Europe 600 Index gained 2.3 percent to 295.55 this past week, closing at the highest level since June 2008. The equity benchmark has surged 5.7 percent so far this year as U.S. politicians agreed on a compromise budget and the Federal Reserve continued its bond-buying program.

“U.S. and European monetary policy has helped stocks,” said Jerome Forneris, a fund manager at Banque Martin Maurel in Marseille, which oversees $8.5 billion. “And jobs data in the U.S. was good. The market is being lifted by the economies in the U.S. and Japan and global growth.”

In the U.S., a Labor Department report showed that the economy added workers at a faster pace in February and the unemployment rate unexpectedly fell to a four-year low of 7.7 percent. Employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than initially estimated, the release showed on March 8.

Fed Vice Chairman Janet Yellen said on March 4 that the central bank should continue with its $85 billion in monthly bond buying. Yellen, who is second to Chairman Ben S. Bernanke, said that the benefits of historically low interest rates and the near-record $3.09 trillion balance sheet outweigh any risk of financial instability.

Japanese Recovery

In Japan, gross domestic product rose an annualized 0.2 percent in the three months through December, the Cabinet Office said on March 8. The world’s third-largest economy contracted 3.7 percent in the previous quarter.

In China, exports increased 21.8 percent in February from a year earlier, the country’s customs administration said on March 8. That beat the 8.1 percent median estimate in a Bloomberg News survey. February had four fewer working days than in 2012.

The European Central Bank kept its benchmark interest rate unchanged at a record low of 0.75 percent this week. The Bank of England also left its key rate unchanged, along with its four-year-old bond-purchase program.

National benchmark indexes climbed in every western-European market except Greece. France’s CAC 40 Index jumped 3.8 percent and the U.K.’s FTSE 100 Index rose 1.6 percent. Germany’s DAX Index rallied 3.6 percent.

Vodafone Gains

Vodafone, the world’s second-largest mobile-phone operator, surged 9.5 percent. Verizon Communications is working to resolve its relationship with Vodafone this year, having weighed options that range from ending its wireless venture with its European ally to a full merger of the two phone companies, people familiar with the situation said on March 5.

Fugro soared 19 percent. The biggest deepwater-oilfield surveyor reported full-year net income of 292 million euros ($379 million), exceeding the average analyst estimate of 282 million euros.

John Wood Group Plc jumped 14 percent. The U.K. oil-services provider active in Africa and the Middle East said on March 5 that profit climbed 43 percent last year as demand rose.

Of the 513 Stoxx 600 companies that have reported annual results this season, 59 percent have beaten analysts’ earnings estimates, according to data compiled by Bloomberg.

“We’ve had good earnings reports and that has helped the market to hold up,” said Amandine Gerard, who oversees $196 million as president of Financiere de L’Arc in Aix-en-Provence.

Peugeot, Debenhams

Peugeot surged 19 percent, for the biggest gain in a gauge of European carmakers. Some 14 percent of the shares are out on loan, according to data compiled by Markit. The stock declined for the previous two weeks.

Debenhams Plc sank 11 percent. The U.K.’s second-biggest department-store operator said on March 4 that fiscal first-half profit would fall short of analysts’ estimates because it snowed in January, forcing the retailer to offer deeper discounts to sell inventory. The half covered the 26 weeks through March 2.

Ophir Energy Plc jumped 12 percent. The U.K. oil and gas explorer active in East and West Africa announced plans on March 4 to raise about $833 million in a share sale, easing concern that it will run out of funds.

Delhaize Group SA, a Belgian food retailer, climbed 13 percent this week after saying on March 7 that net debt declined.

Continental AG, Europe’s second-largest maker of auto parts, advanced 9.1 percent. The company on March 7 reiterated targets to increase sales this year 5 percent and post adjusted earnings before interest and taxes above 10 percent of revenue.

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