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European Stocks Rise Before U.S. Spending Data


European stocks rose after two days of losses dragged equities near to the cheapest valuation in more than two years and as investors awaited a report that may show U.S. consumer spending gained. Asian shares and U.S. index futures climbed.

National Bank of Greece, the country’s largest bank, surged 20 percent to 3.34 euros while Piraeus Bank jumped 29 percent to 72 euro cents. A surge in the country’s banking shares led Greece’s benchmark ASE Index to the biggest gain since May 2010. The gauge jumped 7.6 percent, ending eight days of declines.

Eurobank and Alpha Bank are suspended from trading in Athens as they plan to merge in a bid to bolster their assets and ride out a deepening recession and the country’s sovereign debt crisis. The banks’ boards will meet today to approve the terms of a friendly merger deal, one person with knowledge of the matter said, declining to be named because talks are confidential. The meetings were confirmed by another person, who also declined to be named.

A joint press conference will be held at 2 p.m. in Athens the banks said, without disclosing any details of the subject.

Banca Monte dei Paschi di Siena SpA gained 1 percent as Italy’s third-largest lender said profit rose. Monte Paschi rose 1 percent to 43.7 euro cents. Net income increased to 121.1 million euros ($175 million) from 118.9 million euros a year earlier, the Siena, Italy-based lender said after the market close on August 26. That beat the 108.8 million-euro average estimate of 13 analysts surveyed by Bloomberg.

Banco Popolare SC (BP) added 1.4 percent to 1.14 euros as Italy’s fifth-biggest bank approved a plan to merge some units into the holding company as part of measures to increase efficiency and reduce costs. The lender said second-quarter net income fell 63 percent to 131.4 million euros.

Construction companies posted the best performance among 19 industry groups in the Stoxx 600 as Holcim Ltd., the world’s second-biggest cement maker, rallied 3.1 percent to 47.7 francs.

Carmakers were also among the best performers, climbing 1.5 percent as a group. Bayerische Motoren Werke and Daimler AG, the world’s biggest makers of luxury cars, gained at least 1 percent.

The Stoxx Europe 600 Index advanced 0.7 percent to 227.1 at 8:59 a.m. in London as only eight stocks declined. The gauge has still fallen 22 percent from this year’s peak on February 17 as European and U.S. economic reports trailed forecasts, adding to concern that the global economic recovery is at risk. The decline has left the measure trading at 9.5 times estimated earnings, near the cheapest since March 2009, data compiled by Bloomberg show.

The index advanced for the first week in five last week as Federal Reserve Chairman Ben S. Bernanke indicated the economy isn’t deteriorating enough to warrant any immediate stimulus. He said a second day has been added to the next policy meeting in September to “allow a fuller discussion” of the economy and the Fed’s possible response.

Macro Issues

“The interpretation of equity markets to Bernanke’s speech is positive,” said Matthias Jasper, head of equities at WGZ Bank AG in Dusseldorf. “He left the door open for more action. It’s not the best entry point but it’s a good entry point if you’re not invested so far.”

The MSCI Asia Pacific Index gained 1.5 percent today, while Standard & Poor’s 500 Index futures rose 0.9 percent. The U.K. market is closed for a holiday today.

As central bankers gathered at an annual retreat in Jackson Hole, Wyoming, this weekend, Bernanke urged adoption of “good, proactive housing policies” to reverse the depressed U.S. real estate market and warned lawmakers to avoid steps that may hurt short-term growth. Ewald Nowotny of the European Central Bank Governing Council said euro-area governments should expand the powers of their regional bailout fund.

Bernanke told the conference that the U.S. central bank still has a “range of tools” it could use to help the economy if needed, although he stopped short of signaling that the Fed would embark on a third round of government bond buying.

No Recession

The U.S. won’t slip into recession after Bernanke said the central bank has more tools to support growth if needed, said Templeton Asset Management’s Mark Mobius.

“We have no interest-rates risk in America in the short and long term,” said Robert Halver, chief strategist at Baader Bank AG in Frankfurt. “New economic programs could be launched with such low interest rates. From a fundamental point of view it’s a good entry point but it’s all about politics. Bernanke can’t disappoint in September.”

A report today may show U.S. consumer spending climbed in July. Purchases rose 0.5 percent after a 0.2 percent decline the prior month, according to the median estimate of 64 economists surveyed by Bloomberg News. Another report may show contract signings for sales of existing homes fell last month.

Thousands of repair workers began clearing tree branches and repairing electrical lines to restore power to almost 6 million U.S. homes and businesses after Hurricane Irene left a trail of destruction from North Carolina to Maine.

Source: Bloomberg