European Stocks Post Biggest Weekly Gain Of The Year

European stocks posted their biggest weekly rally of the year as speculation rose that Congress will agree on a U.S. budget that avoids the so-called fiscal cliff and China’s manufacturing expanded.

Nokia Oyj jumped 31 percent for the largest gain in two decades after receiving reports its new Lumia smartphone sold out in Germany. Alcatel-Lucent SA surged 13 percent as people familiar with the matter said it’s in financing talks with Goldman Sachs Group Inc. Daily Mail & General Trust Plc climbed 13 percent after announcing a share buyback and a drop in debt.

The benchmark Stoxx Europe 600 Index soared 4 percent to 273.33 this past week. That’s the biggest advance since Dec. 2 and the first time the gauge has gained every day of the week since July 1, 2011. The measure has increased 17 percent from this year’s low on June 4 as the European Central Bank agreed on an unlimited bond-buying plan and the Federal Reserve started a third round of asset purchases in the U.S.

The news from the U.S. and China “has probably helped investors reconsider their allocation to equity markets,” said Pierre Mouton, a portfolio manager who helps oversee $6 billion at Notz, Stucki & Cie. in Geneva. “It has been a nice ride after a difficult four weeks. There’s a chance that we will see less macro concerns in the short term, and maybe more stock picking.”

The Stoxx 600 lost 4.3 percent through Nov. 16 following President Barack Obama’s Nov. 6 re-election as traders turned their focus to the $607 billion of tax increases and spending cuts that come into force next year if Congress doesn’t act.

Obama ‘Confident’

Obama said at a press conference in Bangkok on Nov. 18 that he is “confident” of striking a deal over a new budget. House Speaker John Boehner, a Republican, said after the close of European trading on Nov. 16 that he held constructive talks with the president and would accept increased government revenue and spending cuts. Congress returns on Nov. 26 after the Thanksgiving recess.

A report by the National Association of Realtors on Nov. 19 showed sales of previously owned houses in the U.S. rose 2.1 percent to a 4.79 million annual pace in October. That beat the average of 4.74 million rate estimated by economists in a Bloomberg survey.

In China, the preliminary reading for a purchasing managers’ index increased to 50.4 in November from a final figure of 49.5 in October, according to a release by HSBC Holdings Plc and Markit Economics. The reading climbed above 50 for the first time in 13 months, signaling expansion.

European Economy

Euro-area factory output contracted less than economists had estimated in November, a Markit Economics report on Nov. 22 showed. The index based on a purchase managers’ survey climbed to 46.2 from 45.4 in October, beating the average economist estimate of 45.6 in a Bloomberg survey.

In Germany, the Ifo institute said its business climate index, based on a survey of 7,000 executives, increased to 101.4 from 100 in October, the first gain in eight months. Economists predicted a drop to 99.5, according to the median estimate of economists in a Bloomberg News survey.

Israel and Hamas agreed to halt eight days of aerial assaults on Nov. 21, after talks brokered by Egypt and the U.S. The cease-fire stopped Israeli air strikes that killed more than 150 people in Gaza and Palestinian rocket attacks that left five Israelis dead.

Euro-region finance ministers failed to reach a deal on a debt-reduction package for Greece at a meeting in Brussels on Nov. 20. The next installment of aid to Greece remains frozen at least until the next meeting scheduled for Nov. 26.

National benchmark indexes increased in all of the 18 western European markets this week, except Iceland. The U.K.’s FTSE 100 rose 3.8 percent, France’s CAC 40 added 5.6 percent and Germany’s DAX Index (DAX) climbed 5.2 percent.

Nokia Lumia

Nokia soared 31 percent, the biggest weekly gain since 1992. The Finnish mobile-phone maker said Nov. 19 it received reports that its Lumia 920 model had sold out in Germany. Danske Bank A/S analyst Ilkka Rauvola advised investors to buy the shares, saying in a note dated Nov. 22 that Nokia will sell 36 million smartphones that use Microsoft Corp.’s Windows software in 2013, higher than an earlier estimate of 23 million.

Alcatel-Lucent jumped 13 percent after people familiar with the matter said Nov. 22 the network equipment vendor is in talks with Goldman Sachs to get a loan to strengthen its balance sheet. Before this week, the company’s shares had declined 35 percent from the beginning of the year to trade near the lowest price since at least 1992.

Daily Mail

Daily Mail climbed 13 percent after saying it will buy back shares of as much as 100 million pounds ($160 million) in the coming year. The publisher of the Daily Mail newspaper also said net debt dropped to 613 million pounds in the year ended Sept. 30 from 719 million pounds 12 months earlier and agreed to sell its regional newspaper business.

Swiss Life Holding AG surged 15 percent, the largest increase since March 2009. Analysts estimated before its investor day on Nov. 28 that the life insurer may write down almost half the value of its German broker unit AWD Holding AG.

KBC Groep NV advanced 14 percent after saying Nov. 19 it is planning its first issue of covered bonds either in the current or the next quarter. ING Groep NV raised its price estimate on the shares.

Royal Imtech NV, the Dutch provider of infrastructure for stadiums in this year’s European soccer championship and London Olympics, dropped 4.8 percent. ABN Amro Bank NV said in a report on Nov. 20 the company could breach a banking covenant this year, and downgraded the shares to sell from buy.

Fugro NV tumbled 12 percent after the world’s biggest surveyor of deepwater oilfields cut its full-year profit forecast and said Chairman Arnold Steenbakker will step down.

Bloomberg