European stocks in big weekly advance

Frankfurt: European stocks rose the most in six months last week, as investors speculated that Japan will prevent further radiation leaks from its stricken nuclear plant and the US economy grew at a faster-than-forecast pace.

Deutsche Telekom AG soared 12 per cent as AT&T agreed to buy T-Mobile USA.

Cie de Saint-Gobain, Europe's biggest provider of building materials, neared its highest price since June 2008.

Rio Tinto Plc gained 5.7 per cent after copper rose and it secured a tax concession from the Australian government.

The benchmark Stoxx Europe 600 Index gained 3.1 per cent this past week for the biggest advance since September. The gauge had declined for four consecutive weeks amid concern that revolts in the Middle East and North Africa will further disrupt oil supplies and after Japan suffered its strongest earthquake on record. The gauge has recouped 5.3 per cent since this year's low on March 16.

"The impact on financial markets of the natural catastrophe in Japan was not as dramatic as people feared and valuations are currently too attractive for investors to ignore," said Kai Fachinger, who manages a €600 million (Dh3.1 trillion) fund for SAM Sustainable Asset Management AG in Zurich. "Still, Portugal's debt problem is an issue that will return to haunt markets."

The Stoxx 600 Index is trading at about 13.5 times its companies' reported earnings, near the gauge's cheapest multiple since 2009, according to data compiled by Bloomberg.

Nestle boost

In Japan, the government estimated the damage from the earthquake and tsunami on March 11 at as much as 25 trillion yen (Dh1131.5 billion). Tokyo authorities said babies should avoid drinking tap water after finding traces of iodine, boosting shares of bottled water suppliers including Switzerland-based Nestle SA, which rose 4.9 per cent this week.

Billionaire investor Warren Buffett said the earthquake is a buying opportunity and he won't sell his Japanese shares as the tremor hasn't changed the nation's future.

Rebound

European stocks rebounded as the US, the UK and France imposed a no-fly zone over Libya, sending aircraft to strike Colonel Muammar Gaddafi's ground forces. Coalition forces have mounted successive attacks against the armoured units that loyal to the country's ruler of the last 41 years. The three countries intervened to prevent Gaddafi's troops from entering Benghazi, the centre of the rebellion.

Stocks extended their gains as Portugal's Prime Minister Jose Socrates offered to resign after parliament rejected his package of cuts to government spending. Investors speculated that Socrates's defeat will force the country to ask the European Union for a bailout.

Two European officials with direct knowledge of the matter said Portugal may need €70 billion. The US economy grew at a 3.1 per cent annual rate in the fourth quarter, led by a jump in consumer spending that will be hard to sustain after energy prices surged early this year. The revised increase in gross domestic product compares with a 2.8 per cent estimate last month, figures from the Commerce Department showed.

In Germany, business confidence fell less than economists had predicted from a record high in March. The Munich-based Ifo institute said its business-climate index, based on a survey of 7,000 executives, declined to 111.1 from 111.3 in February, which was the highest reading since records for a reunified Germany began in 1991. Economists had predicted a drop to 110.5, according to the median of 39 forecasts in a Bloomberg News survey.

Deutsche Telekom soared 12 per cent, the biggest gain since 2008 after AT&T agreed to buy T-Mobile USA to create America's largest mobile-phone company, trumping Sprint Nextel's effort to acquire the business.

Vodafone, the world's largest mobile-phone operator, climbed 3.9 per cent.

The AT&T deal cuts the number of mobile phone operators in the US, benefiting Vodafone's joint venture with Verizon Communications, according to analysts including Robin Bienenstock at Sanford C Bernstein and Co.

AT&T's acquisition helped a gauge of Stoxx 600 telecommunications companies rally 3.7 per cent this week.

Rebuilding begins

Construction and building-materials manufacturers rose the most out of 19 industry groups in the benchmark measure, following gains in Asia, as investors speculated that demand will increase as Japan rebuilds.

Saint Gobain gained 6.8 per cent, taking the stock close to its highest price since June 2008. CRH Plc surged 6.2 per cent.

UK homebuilder Barratt Developments advanced 9.4 per cent after the UK government announced measures to help first-time buyers get cheaper mortgages.

A group of European carmakers surged 4.5 per cent, led by Fiat. The Italian company gained 8.6 per cent. Pirelli, Europe's third-largest maker of tires, rallied 5.4 per cent this past week and raised its revenue target for 2011 to more than €5.5 billion.

Cap Gemini, Europe's largest computer-services company, rose 7.6 per cent and SAP jumped 5.5 per cent as technology companies were amongst the three furthest advancing industry groups in the Stoxx 600.

Accent, the world's second-largest technology-consulting company, gave a sales forecast for this quarter that exceeded analysts' estimates and Oracle predicted that fourth-quarter profit will top analysts' estimates.

Tax concession

Rio Tinto, the world's third-largest miner, advanced 5.7 per cent. London-based Rio and larger competitor BHP Billiton secured their second tax concession in Australia after the government agreed to allow them to credit future state royalties imposts against a planned 30 per cent levy on their profits. Xstrata, the world's largest exporter of thermal coal, gained 3.8 per cent.

Swatch, the world's largest watchmaker, surged 7 per cent. Exports of timepieces rose 17.8 per cent in February, the Swiss Federal Customs Office in Bern said.

Drax Group slumped 7.8 per cent as UK Chancellor of the Exchequer George Osborne said generators will have to pay a new charge on carbon-dioxide emissions. The Treasury set its floor at £16 a ton, rising to £30 by 2020, after consulting with utilities, according to a Treasury spokesman who declined to be named. The government may raise its carbon tax to ensure a premium over European Union emissions permits, according to a report from Citigroup.

Cable and Wireless Worldwide tumbled 12 per cent, the biggest weekly decline since July, after the telecommunications company said that the financial year's gross margins in its legacy voice business will decline more than it had predicted.