European stocks rallied by the most in more than three months after reports showed growth in U.S. and Chinese manufacturing accelerated and Vivendi SA raised its earnings forecasts.
Mining companies Xstrata Plc and Antofagasta Plc advanced more than 6 percent as copper climbed to a four-month high. Vivendi, owner of the world’s largest record company, jumped 5 percent. Vinci SA, the world’s biggest builder, surged 4.8 percent as earnings topped estimates.
The Stoxx Europe 600 Index climbed 2.7 percent to 258.19 at the 4:30 p.m. close in London, the biggest gain since May 27. The gauge dropped 1.6 percent last month after disappointing economic data from the U.S. sparked concern the world’s biggest economy may tip back into recession.
“We don’t expect a double dip,” said Gunnar Miller, Frankfurt-based head of research at Allianz Global Investors’ RCM unit, on Bloomberg Television’s ‘On The Move’ with Mark Barton. “We are seeing ongoing structural growth in BRICs as evidenced by the Chinese growth figures,” he said, referring to the acronym for Brazil, Russia, India and China.
National benchmark indexes advanced in all 18 western European markets. Germany’s DAX rallied 2.7 percent and France’s CAC 40 soared 3.8 percent. The U.K.’s FTSE 100 gained 2.7 percent as Cable & Wireless Worldwide Plc jumped.
Stocks extended their advance after the Institute for Supply Management’s gauge of U.S. manufacturing unexpectedly increased to 56.3 in August from 55.5 a month earlier. China’s purchasing managers’ index rose to 51.7 from 51.2, according to a government-backed report. A separate Chinese PMI released by HSBC Holdings Plc and Markit Economics gained to 51.9 from 49.4.
In Australia, second-quarter gross domestic product advanced 1.2 percent from a revised 0.7 percent in the prior period, the fastest pace in three years.
Even so, data from ADP Employer Services showed U.S. companies unexpectedly cut 10,000 jobs in August. The private report comes two days before the Labor Department’s August payrolls release that may show companies added 43,000 workers last month, compared with 71,000 in July, according to a Bloomberg survey of economists.
“The economic figures from the U.S. and abroad have been very mixed,” Manoj Ladwa, a London-based senior trader at ETX Capital, said on Bloomberg Television’s ‘On The Move’ with Francine Lacqua. “In some areas there is increased unemployment and a slowing down in housing then you look to China and Australia. A lot of mixed signals creates uncertainty.”
Xstrata, the world’s fourth-largest copper producer, gained 6.1 percent to 1,088.5 pence as the base metal advanced to the highest level since April in London. Antofagasta, owner of copper mines in Chile, rose 6 percent to 1,094 pence.
BP Plc, Europe’s second-biggest oil company, advanced 2.1 percent to 388.75 pence as crude climbed above $74 a barrel. Royal Dutch Shell Plc, Europe’s largest oil company, surged 2.7 percent to 1,779 pence and Total SA increased 3.5 percent to 38.15 euros.
Vivendi led media companies higher, rallying 5 percent to a fourth-month high of 19.33 euros as the owner of Universal Music Group raised its full-year targets. First-half profit gained 4 percent to 1.53 billion euros ($1.94 billion), topping the average analyst estimate of 1.49 billion euros.
Vinci advanced 4.8 percent to 36.27, leading a measure of construction shares 3.4 percent higher. The builder reported a 1.9 percent increase in first-half profit to 703 million euros, beating analysts’ average estimate of 681, according to a Bloomberg survey.
Lafarge SA, the world’s biggest cement maker, climbed 5.5 percent to 38.35 euros after being upgraded to “outperform” from “underperform” at CA Cheuvreux.
Cable & Wireless Worldwide rallied 7.7 percent to 71.95 pence amid speculation that AT&T Inc. or another firm may bid for the company.
“The rumor is driving the share price,” said Tom Gidley- Kitchin, an analyst with Charles Stanley Group Plc in London. The company has a large international communication network which AT&T or others looking to expand internationally could “potentially find helpful,” he said.
AT&T spokesman Niall Hickey said the company doesn’t comment on market speculation. Cable & Wireless’s spokespeople couldn’t immediately be reached for comment.
TUI Travel Plc surged 9.2 percent to 216.4 pence after the Financial Times Deutschland reported that TUI AG’s directors are weighing the purchase of shares in TUI Travel that it doesn’t already own. The newspaper didn’t say where it obtained the information. TUI AG shares gained 5.1 percent to 8.36 euros.
Announced global mergers and acquisitions have totaled $1.35 trillion so far this year, 25 percent more than during the same period last year, according to data compiled by Bloomberg.
Bourbon SA dropped 3.7 percent to 29 euros for the second- largest decline in the Stoxx 600. The owner of the second- biggest fleet of supply and crew ships for the oil industry said first-half earnings halved to 41 million euros due to charges related to the sale of bulk carriers.