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European stocks rose, with the Stoxx Europe 600 Index climbing for a fifth day, as Federal Reserve Chairman Janet Yellen said more work is needed to restore the labor market to health.
Carmakers posted the biggest gain among 19 industry groups in the Stoxx 600 after Goldman Sachs Group Inc. boosted its growth forecasts for auto sales in western Europe.
The Stoxx 600 advanced 1.2 percent to 329.29 at 4:30 p.m. in London, taking its five-day gain to 3.7 percent. The gauge lost 5.5 percent from its six-year high on Jan. 22 through Feb. 4 amid concern about the Fed’s bond-buying cuts, China’s economic slowdown and volatility in developing markets.
Yellen testified before the House Financial Services Committee as investors weigh the pace of stimulus reductions. While growth has picked up, “the recovery in the labor market is far from complete,” Yellen said today in the text of her remarks. She repeated the Fed’s outlook for further reductions in “measured steps” and that asset purchases are not on a “pre-set course.”
The Fed said in December that it would start cutting the monthly pace of asset purchases. It announced a $10 billion reduction that month, followed by a cut of the same size in January to $65 billion.
Data on Feb. 6 showed U.S. jobless claims dropped for the first time in three weeks. A government report the next day indicated payrolls rose by a less-than-projected 113,000 jobs in January and the unemployment rate unexpectedly fell to the lowest level in more than five years.
National benchmark indexes advanced all western-European markets except Greece today.
FTSE 100 6,672.66 +81.11 +1.23% CAC 40 4,283.32 +46.19 +1.09% DAX 9,478.77 +188.91 +2.03%
PSA Peugeot Citroen advanced 4.5 percent to 12.02 euros after Goldman Sachs added the company to its conviction-buy list. Bayerische Motoren Werke AG rose 2.6 percent to 84.16 euros after the New York-based bank recommended buying the stock. Nokian Renkaat Oyj (NRE1V) climbed 3.7 percent to 33.50 euros after HSBC Holdings Plc and SEB AB raised their ratings on the biggest tiremaker in the Nordic region.
Michelin, Europe’s largest tiremaker, climbed 3.6 percent to 83.93 euros. The company will stick with its earnings targets for 2015 as it predicts volume will rise this year and first-half spending on supplies will drop. The manufacturer will probably achieve its 1 billion-euro ($1.4 billion) cost-savings goal for 2016, Chief Executive Officer Jean-Dominique Senard said. Michelin will raise its dividend 4.1 percent to 2.50 euros a share, the company said.
Hexagon AB (HEXAB) rallied 6.4 percent to 224 kronor. The world’s largest maker of measuring instruments reported fourth-quarter net income of 104.1 million euros, exceeding the 98.2 million euros posted in the same period last year and beating analysts’ estimates. The Stockholm-based company also proposed increasing its dividend to 31 euro cents a share from 28 cents a year earlier.
ICAP Plc (IAP) increased 3.7 percent to 413.9 pence. Goldman Sachs raised its recommendation on the world’s largest broker of transactions between banks to neutral from sell after the stock dropped 13 percent from its Jan. 15 high through yesterday.
Barclays fell 4 percent to 263.9 pence. The U.K.’s second-largest lender by assets said its investment-bank unit had a pretax loss of 329 million pounds ($539 million) in the last three months of 2013, compared with a profit of 760 million pounds in the year-earlier period. The company said it will raise bonuses by 10 percent and cut jobs.
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