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European stocks rose to a nine-week high as banks rallied on better-than-forecast profit at Societe Generale SA and Lloyds Banking Group Plc while Chinese manufacturing data boosted mining companies.
The Stoxx Europe 600 Index gained 1.2 percent to 303.29 at the close of trading, its highest level since May 30. The gauge jumped 5.1 percent in July as the Federal Reserve said it stays flexible on the pace of bond buying. The Stoxx 600 trades at a price-earnings multiple of 13.7, its highest since 2009.
The European Central Bank and the Bank of England today left their benchmark interest rates unchanged, as forecast by economist in Bloomberg surveys. ECB President Mario Draghi said indications are that the euro-area economy is stabilizing and the central bank’s rates will remain low for an extended period. The Bank of England’s Governor Mark Carney will present the Monetary Policy Committee’s review of steering policy expectations next week.
The final reading of a euro-area manufacturing gauge, based on a survey of purchasing managers, was for 50.3, Markit Economics said. That beat the initial reading and average economists’ forecast of 50.1 and signals expansion for the first time in two years.
National benchmark indexes advanced in all the 17 western European markets open today. Switzerland was closed for the National Day holiday.
FTSE 100 6,681.98 +60.92 +0.92% CAC 40 4,042.73 +50.04 +1.25% DAX 8,410.73 +134.76 +1.63%
Banks and mining companies were the best performers among 19 industry groups in the Stoxx 600. Societe Generale rallied 10 percent to 33.35 euros, the biggest gain since January 2012, after posting second-quarter profit that more than doubled and beat analysts’ estimates.
Lloyds advanced 8.1 percent to 74 pence. Britain’s biggest mortgage lender posted its first profitable six-month period in three years. “As a consequence of the significant progress made in strengthening the balance sheet, we now expect to commence discussions with our regulators in the second half of this year on the timetable and conditions for dividend payments,” Lloyds said in a statement.
A gauge of commodity producers advanced for the first time in three days. China’s official manufacturing index for July unexpectedly rose to 50.3, compared with economists’ estimates for a drop to 49.8. Another manufacturing gauge released by HSBC Holdings Plc and Markit Economics fell to 47.7, an 11-month low.
Rio Tinto added 2.8 percent to 3,038 pence and BHP rose 2.2 percent to 1,920 pence. Anglo American Plc gained 5.3 percent to 1,483 pence.
Metro AG climbed 8.5 percent to 28.11 euros as Germany’s largest retailer reported second-quarter earnings before interest, taxes and some items of 276 million euros ($366 million). Analysts on average had estimated 269.2 million euros.
Societe Bic SA jumped 6.8 percent to 89.04 euros, its biggest increase since April 2012. The maker of Bic Cristal pens posted first-half revenue of 937.5 million euros, exceeding the 928.8 million euros projected by analysts.
Sanofi tumbled 4.1 percent to 76.85 euros. France’s biggest drugmaker said full-year earnings per share excluding some costs and currency fluctuations may fall as much as 10 percent. It had previously forecast a drop of 5 percent at worst.
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