European Stocks Post Weekly Gain on U.S. Economic Data

European stocks posted a weekly gain as better-than-estimated U.S. data bolstered investor confidence the economic recovery is on course, outweighing an escalation in the crisis in eastern Ukraine.

UniCredit SpA rose 4 percent and Banco Popolare SC advanced 6.6 percent after Berenberg Bank said Italian lenders will benefit the most if the rebound in the European economy continues. Tesco Plc added 3.1 percent after reporting trading profit that beat estimates. Afren Plc helped a gauge of oil-and-gas companies post the best performance among industry groups. ASML Holding NV tumbled 7 percent after forecasting second-quarter sales that trailed analysts’ projections.

The Europe Stoxx 600 Index added 1.1 percent to 332.43 in the holiday-shortened week. The benchmark gauge has climbed in four of the last five weeks and increased 1.3 percent in 2014.

“U.S. data is fine,” James Buckley, who helps oversee about $50 billion as a portfolio manager at Baring Asset Management Ltd. in London, said by telephone. “Housing is a bit soft but all the other indicators are tracking quite well. The improvement looks well established, and that will help U.S. equity markets and spill over into European markets.”

National benchmark indexes rose in 11 of the 18 markets in western Europe. The U.K.’s FTSE 100 and Germany’s DAX advanced 1 percent each, while France’s CAC 40 gained 1.5 percent. Markets will remain closed on April 18 and April 21 for Good Friday and Easter Monday.

American Economy

U.S. reports this week showed retail sales and industrial production in the world’s largest economy jumped in March, topping estimates. Fewer Americans than forecast filed first-time applications for jobless benefits, while house construction increased less than projected, separate data showed.

The violence in eastern Ukraine escalated this week and the acting government in Kiev accused Russia of deploying troops in its territory. The U.S. and the European Union threatened to extend sanctions on Russia after American President Barack Obama and Russian President Vladimir Putin failed to reach a breakthrough in a phone call. All the four sides met in Geneva on April 17 to discuss the standoff.

UniCredit, Italy’s largest bank, gained 4 percent and Banco Popolare, the fourth-biggest, advanced 6.6 percent.

“Italian banks continue to score very well,” Berenberg analysts led by Andrew Lowe wrote in a note on April 15. “While we believe that the Italian banks will continue to outperform if the economic recovery proves sustainable, investors may look to switch into other European recovery plays in the short term.”

Tesco Earnings

Tesco rose 3.1 percent. The U.K.’s largest retailer reported group trading profit of 3.32 billion pounds ($5.6 billion) in the year through Feb. 22, exceeding the 3.23 billion pounds projected by analysts. Jeronimo Martins SGPS SA, a Portuguese retailer gained 5 percent.

Afren rallied 6.8 percent and Statoil ASA advanced 5.4 percent. An index of oil-and-gas companies jumped to its highest level since October 2012, leading gains among the 19 industry groups on the Stoxx 600, as West Texas Intermediate crude posted a second weekly increase.

Sodexo added 5.1 percent as Deutsche Bank AG advised investors on April 15 to buy shares in the world’s second-largest catering company. Two days later, the company reported first-half operating profit of 559 million euros ($773 million), exceeding the 548.4 million euros estimated by analysts.

Resolution Ltd. gained 3.7 percent. Barclays Plc reiterated its overweight, or buy, recommendation on the life-insurance company, while Berenberg Bank upgraded its rating to hold from sell. Both firms said the recent declines in the stock are overdone. The U.K. company has plunged 25 percent since March 6, when it had reached its highest price since May 2009.

ASML Holding NV tumbled 7 percent. Europe’s largest semiconductor-equipment supplier predicted revenue this quarter will be about 1.6 billion euros, falling short of the average analyst forecast of 1.7 billion euros.

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