European stocks posted their third straight weekly advance, with the Dow Jones Stoxx 600 Index completing its biggest annual increase in a decade as the global economy recovered from its worst recession since World War II.
Basic-resources companies and banks, the worst-performing industry groups in 2008, led gains in the measure, surging 100 percent and 46 percent in 2009, respectively. Kazakhmys Plc, Kazakhstan’s biggest copper producer, soared 475 percent, as the price of the metal more than doubled. Natixis SA, the investment-banking unit of France’s second-largest lender by branches, climbed 184 percent.
The Stoxx 600 rose 28 percent to close the year at 253.16, having posted a 0.5 percent gain in the holiday-shortened week as China raised its economic growth forecast. The measure rebounded 60 percent from the 2009 low in March amid record-low interest rates in the U.S. and Europe and as governments committed about $12 trillion worldwide to revive credit markets and stimulate growth. The S&P 500 gained 23 percent in 2009.
“There was the conviction that governments weren’t going to abandon the economy,” said Emmanuel Soupre, who helps manage about $15.6 billion at Neuflize OBC in Paris. “What lifted the market was the idea that we no longer spoke of a depression, but only a recession. When we saw depressive forces countered by government and central bank support, that helped the market to take off.”
15-Month High
The Stoxx 600 reached a 15-month high on Dec. 29, trimming its drop over the past decade to 33 percent. Its best month last year was April, with the gauge soaring 13 percent as U.S. banks including Citigroup Inc. and Goldman Sachs Group Inc. reported earnings that exceeded analysts’ estimates. The measure climbed 5.9 percent in December. The S&P fell 24 percent in the last decade.
The VStoxx Index, which gauges the cost of using options to protect against declines in the Euro Stoxx 50, a measure for the countries sharing the euro, sank 45 percent in 2009 for the first annual drop since 2004.
National benchmark indexes rose in all of the 18 western European markets except Iceland in 2009. The north Atlantic island is the western nation hardest hit by the global credit crisis, and needed to turn to the International Monetary Fund for a $2.1 billion loan to avert a default.
Norway’s OBX was the best performer, gaining 70 percent as higher oil prices lifted oilfield-services companies including Seadrill Ltd. and Petroleum Geo-Services ASA, which both more than doubled.
Lehman Collapse
The U.K.’s FTSE 100 climbed 22 percent, and on Dec. 29 became the first equity market among the biggest developed economies to recover its loss following Lehman Brothers Holdings Inc.’s bankruptcy in September 2008. The U.K. joined Hong Kong, Norway, Portugal, Singapore, Spain and Sweden as the only nations among 23 developed markets that have recouped all of their post-Lehman losses.
“We erased the Lehman period and returned to the level prior to the collapse,” said Guillaume Duchesne, Luxembourg- based equity strategist at Fortis Private Banking, which oversees about $117 billion. “Investors played the stabilization of the economy.”
France’s CAC 40 advanced 22 percent in 2009, as PSA Peugeot Citroen, Europe’s second-largest carmaker, and Renault SA, France’s second-biggest, each surged 95 percent. French car sales increased for a seventh consecutive month in November as government rebates for scrapping old vehicles when new ones are purchased, combined with environmental bonus-and-penalty payments, spurred demand for more fuel-efficient cars and slowed sales of luxury vehicles.
Infineon Technologies
Germany’s DAX rallied 24 percent, with Infineon Technologies AG surging 352 percent. Europe’s second-biggest semiconductor maker entered the benchmark gauge after returning to profit following 10 consecutive quarters of losses.
The Stoxx 600 posted its biggest annual retreat on record in 2008, falling 46 percent, as credit losses and writedowns at the world’s largest financial firms surpassed $1 trillion and the U.S., Europe and Japan entered simultaneous recessions. Basic-resources shares and banks in the measure each lost 64 percent as investors sold off shares linked to economic growth and those most hurt by the credit crisis.
Kazakhmys jumped 475 percent in 2009, while Boliden AB, Europe’s second-biggest zinc producer, soared 428 percent as the best-performing mining shares in the Stoxx 600.
Copper more than doubled in 2009 with the help of record first-half imports into China, the world’s largest consumer. Prices are up almost fourfold from the end of 1999 in London.
Natixis
Natixis surged 184 percent for the best performance among bank stocks. The French lender this month said it will be profitable in the fourth quarter.
All 19 industry groups in the Stoxx 600 rose in 2009.
This past week, the measure capped its longest stretch of weekly gains since August as China raised its 2008 growth estimate to 9.6 percent from 9 percent and said quarterly figures for 2009 will also increase.
An index of home prices in 20 U.S. cities rose in October for a fifth consecutive month, putting the housing market and economy farther down the path to recovery, according to a report on Dec. 29. A separate report on the same day from the New York- based Conference Board showed confidence among U.S. consumers rose in December for a second month as pessimism over the outlook for jobs diminished.
Companies in the U.S. expanded in December at the fastest pace in almost four years, according to The Institute for Supply Management-Chicago Inc. on Dec. 30.
Mining Shares
Antofagasta Plc, the copper producer controlled by Chile’s Luksic family, and Lonmin Plc, the world’s third-largest platinum producer, led basic-resources shares higher as metals rose. They gained 6 and 4.2 percent, respectively, this past week.
Q-Cells SE surged 14 percent, the best performer in the Stoxx 600 this past week, after Handelsblatt newspaper cited the German solar-cell maker’s chief executive officer as saying the company expects to be profitable in 2010.
Basilea Pharmaceutica Ltd. tumbled 17 percent, the biggest weekly retreat since February. The U.S. Food and Drug Administration rejected its experimental ceftobiprole antibiotic because clinical trial data were “unreliable.” The FDA requested two new studies on the drug, Basilea said.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net
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