Europe Stocks Rise After Fourth Quarterly Gain With BNP

European stocks climbed the most in almost two months, led by commodity producers and banks, as data showed manufacturing in China and the euro area expanded.

BNP Paribas SA rose the most since October after saying it intends to keep its dividend unchanged, even as it agreed to plead guilty to U.S. sanctions violations and pay $8.97 billion in fines. Rio Tinto Group helped send mining stocks higher after Bank of America Corp. upgraded its rating on the shares. Bilfinger SE sank 18 percent after cutting its full-year profit forecast. Kloeckner & Co SE fell 4 percent as Credit Suisse Group AG recommended selling the stock.

The Stoxx Europe 600 Index gained 0.9 percent to 344.89 at the close in London. The equity gauge climbed 2.3 percent in the second quarter, capping the longest stretch of quarterly advances since 2010, and sending its rally for the year to 4.1 percent. The gains came even as the index lost 0.7 percent in June as violence in Iraq and disappointing economic data outweighed the European Central Bank’s stimulus measures.

“Economic indicators still suggest everything is in place for a recovery,” Dirk Thiels, head of investment management at KBC Asset Management NV, said by phone from Brussels. “The data in Europe, although not spectacular, is holding steady above the expansion level, and the U.S. looks like it’s going in the right direction. We managed to have quite a decent run in the first quarter, and now people are waiting for the next catalyst. There could be a positive surprise from earnings.”

High Valuation

The European equity index trades at 15.5 times the projected earnings of its members, near its highest valuation since the end of 2009. That compares with a five-year average of 12.5, data compiled by Bloomberg show.

Manufacturing in the euro area expanded at a slower pace last month. The final reading of a Markit Economics gauge slipped to 51.8 in June from 52.2 in May. Still, activity has expanded, or stayed above the 50 level, for a year.

A U.S. report from the Institute for Supply Management showed its manufacturing gauge fell to 55.3 in June from 55.4 the previous month. The median economist forecast called for 55.9. In China, manufacturing expanded in June at the fastest pace this year.

National benchmark indexes advanced in 17 of the 18 western-European markets today. France’s CAC 40 and the U.K.’s FTSE 100 each gained 0.9 percent. Germany’s DAX added 0.7 percent.

BNP Dividend

BNP Paribas climbed 3.6 percent to 51.33 euros. The largest French lender admitted in court documents that it processed almost $9 billion in banned transactions from 2004 to 2012 involving Sudan, Iran and Cuba. The bank said it intends to pay a 2014 dividend of 1.50 euros a share, unchanged from last year, even as it will take a second-quarter charge of 5.8 billion euros ($7.9 billion).

Stoxx 600 lenders advanced 1.8 percent, the second-largest increase among 19 industry groups. They halted seven consecutive days of losses, the longest streak since November 2011.

Mining stocks posted the biggest rally since May 12. Rio Tinto added 3 percent to 3,202.5 pence as Bank of America Merrill Lynch raised its rating on the stock to buy from neutral, saying the price of iron ore may stop falling. BHP Billiton Ltd. climbed 2.9 percent to 1,944.5 pence, while Anglo American Plc rose 4 percent to 1,487 pence.

Bilfinger slumped 18 percent to 68.50 euros. The German builder said adjusted net profit will drop to 230 million euros to 245 million euros in 2014, down from a February estimate of 249 million euros. Analysts had projected 270 million euros. The company said its German energy clients are reluctant to build more power plants because of regulatory changes.

Kloeckner Downgrade

Kloeckner dropped 4 percent to 10.58 euros. Credit Suisse downgraded the German steel trader to underperform, similar to a sell rating, from the equivalent of buy, citing a lackluster steel environment. The brokerage also cut its projection for 2014 earnings before interest, taxes, depreciation and amortization to 194 million euros from 215 million euros. Analysts predicted 203 million euros on average.

Rhoen Klinikum AG fell 1.7 percent to 23.71 euros. Fresenius SE said it sold a 5 percent stake in the hospital operator, or 6.9 million shares, to Berenberg, which will sell them to institutional investors, according to a statement.

Ocado Group Plc declined 4.4 percent to 355 pence. The online retailer said competition has increased, with supermarket discounts in recent months affecting prices of certain fresh products. Ocado also posted first-half revenue that missed analysts’ estimates.

Let’s Gowex SA, a Spanish provider of Wi-Fi connections, sank a record 46 percent to 10.71 euros. Gotham City Research LLC, which is betting against the stock, said the company’s wireless sales are at most 10 percent of what was reported. Jenaro Garcia, chief executive officer of the Madrid-based company, said he is looking at possible legal action against Gotham.

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