Frankfurt: European stocks climbed for a fourth week, the longest stretch of gains since April, amid speculation that the economic recovery will continue into 2011.
UPM-Kymmene Oyj led a rally in papermakers after the company agreed to acquire two rivals. ARM Holdings Plc surged as Microsoft Corp. is set to unveil a version of its Windows computer operating system that runs on the British company's technology for the first time. Xstrata Plc and Antofagasta Plc led raw-material shares higher as metal prices were boosted by reports on economic growth.
The Stoxx Europe 600 Index climbed 1.6 per cent to 280.90 last week, extending this year's rally to 11 per cent. The gauge has recovered from the plunge that followed Lehman Brothers Holdings Inc.'s collapse in September 2008 as companies reported higher earnings, the European Union bailed out Greece and Ireland and the Federal Reserve unveiled $600 billion of additional bond purchases to help the economy.
"Growth will continue to progress, although at a slower pace," said Giordano Lombardo, who oversees about €186 billion (Dh907.6 billion) as chief investment officer at Pioneer Global Asset Management SpA in Milan. Attractive valuations and strong corporate profits "will underpin equities as the strongest candidate for the best asset class of next year, provided there are no major policy mistakes in the US or Europe."
Revised increase
The US economy, the world's largest, expanded at a 2.6 per cent annual rate in the third quarter. The revised increase in gross domestic product compares with a 2.5 per cent estimate issued last month, figures from the Commerce Department showed December 22.
Separate US reports on December 23 showed consumer spending and new-home purchases increased, fewer people filed applications for jobless-benefit claims and consumer sentiment climbed to a six-month high.
Concern about the ability of some European governments to reduce their budget deficits eased last week as Chinese Vice Premier Wang Qishan said the world's second-largest economy has taken "action to help some EU members counter the sovereign-debt crisis."
China holds a record $2.65 trillion (Dh9.74 trillion) in foreign- exchange reserves.
Trading volume on the Stoxx 600 declined every day last week as the Christmas holiday approached, according to data compiled by Bloomberg.
UPM surged 11 per cent after Europe's second-biggest papermaker agreed to buy Myllykoski and Rhein Papier GmbH for about €900 million as the industry consolidates in response to higher production costs and a shift in demand to digital publications. Stora Enso soared 10 per cent, the third-biggest rally on the Stoxx 600. Mondi Plc, Europe's largest maker of office paper, climbed 4.7 per cent.
ARM gained 9.1 per cent. The new product will debut at the Consumer Electronics Show in January, said two people familiar with the plans, who asked not to be identified because Microsoft's plans are confidential. Microsoft will tailor the operating system for battery-powered devices, such as tablet computers and other handhelds, the people said.
Xstrata climbed 3.1 per cent and Antofagasta advanced 4.9 per cent as copper posted its fourth straight weekly increase.
