European stocks climbed for a second week as results of the US government’s bank stress tests fueled speculation the worst of the credit crisis has passed amid signs the global economy is stabilizing.
BNP Paribas SA, France’s largest bank, and UBS AG rallied more than 7 percent after US Federal Reserve Chairman Ben Bernanke said the outcome of the review “should provide considerable comfort.”
Danske Bank A/S and Swiss Reinsurance Co soared more than 30 percent after reporting better-than-estimated earnings. Kazakhmys PLC, Kazakhstan’s biggest copper producer, and BP PLC rose with higher metal and oil prices.
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The Dow Jones STOXX 600 Index added 4.6 percent to a four-month high of 209.51. The measure has surged 33 percent since March 9, erasing its decline for this year, as earnings at companies from Credit Suisse Group AG to BASF SE beat projections and reports signaled the global recession is easing.
“We’ve seen a good recovery since March,” said Daniel Knuchel, chief investment officer at ATAG Asset Management in Zurich, which oversees about US$3 billion. “Better-than-expected economic data and the results of the stress tests have reassured the markets this week. The positive news will have to last for the rally to continue or we may see a consolidation soon.”
US government figures showed employers cut fewer jobs last month than economists forecast, while other reports signaled improvements in US home sales, manufacturing in China and German exports.
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National indexes rose in all 18 western European markets. Germany’s DAX Index climbed 3 percent, while France’s CAC 40 added 4.8 percent. The UK’s FTSE 100, which was closed for a holiday May 4, advanced 5.2 percent.
The European Central Bank cut its key interest rate to a record low of 1 percent, while the Bank of England held its benchmark rate at 0.5 percent and boosted the size of its asset purchase program by £50 billion (US$76 billion) to £125 billion.
A measure of banks in the STOXX 600 climbed 10 percent to the highest level since November.
BNP Paribas, which said this week its capital level is “perfectly adequate,” jumped 14 percent. UBS climbed 7.2 percent after the European bank with the biggest writedowns from the financial crisis reported a narrower first-quarter loss and increased capital.
Royal Bank of Scotland Group PLC rose 7.7 percent as Britain’s largest government-owned bank reported higher first-quarter revenue on “exceptional” growth at its global banking and market securities unit and income from its rates business.
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