Most European Stocks Rise; BHP Billiton, Deutsche Telekom Gain

By Daniela Silberstein

Sept. 8 (Bloomberg) -- Most European stocks advanced as commodity producers rallied with metal prices and investors speculated that mergers will increase.

BHP Billiton Ltd., the world’s biggest mining company, and Randgold Resources Ltd. surged more than 2.5 percent as copper and gold rose. Deutsche Telekom AG and France Telecom SA climbed more than 1.5 percent after agreeing to merge their U.K. mobile- phone units.

The Dow Jones Stoxx 600 Index added 0.2 percent to 237.73 at 3:31 p.m. in London, as three stocks rose for every two that fell. The gauge has surged 51 percent since March 9 as companies from GlaxoSmithKline Plc to Johnson & Johnson reported results that topped estimates and the German and French economies unexpectedly expanded.

“I’m feeling pretty optimistic,” Jane Coffey, who helps oversee $12 billion at Royal London Asset Management, said in a Bloomberg Television interview. “Economic data will continue to look good, corporate earnings are looking pretty good. My concern was that we’re going to have a lot equity issuance and that will weigh on the market. If we get the counter of M&A taking the stock away that will equal things out.”

European stocks pared their advance after U.S. trading opened, as a measure of bank shares declined.

Credit Suisse Group AG strategists said investors should favor stocks over bonds and cash and forecast gains in equity indexes worldwide ranging from 12 percent for Europe and 23 percent for Japan through mid-2010 as the economy recovers.

‘Best Phase’

“This is the best phase of the economic cycle,” a team of strategists led by Andrew Garthwaite in London wrote today. “We do not exclude a period of near-term consolidation, given that some of our tactical indicators are sending a signal of caution. Yet, other indicators suggest it is too early to sell.”

International Monetary Fund Managing Director Dominique Strauss-Kahn told the Il Sole 24 Ore newspaper that the crisis phase that toppled Lehman Brothers Holdings Inc. in September 2008 “is almost certainly behind us.”

U.K. manufacturing increased three times as much as economists forecast in July in the biggest jump in 18 months, boosted by higher production of cars and pharmaceuticals. Output rose 0.9 percent from the previous month, the Office for National Statistics said today in London.

National benchmark indexes rose in 11 of the 18 western European markets. The U.K.’s FTSE 100 gained 0.2 percent and France’s CAC 40 advanced 0.1 percent. Germany’s DAX added 0.3 percent as TUI AG climbed.

Mining Companies

BHP Billiton rose 2.5 percent to 1,664 pence and Rio Tinto Group, the third-largest mining company, gained 3 percent to 2,539.5 pence. A gauge of basic-resource companies in the Stoxx 600 surged 1.9 percent, the second-steepest advance among 19 industry groups, as copper, nickel, zinc and tin advanced on the London Metal Exchange.

Goldman Sachs Group Inc. raised it forecasts for industrial metals prices, citing “increasing signs and confidence that the global economy is finally recovery.”

Randgold, an owner of gold mines in West Africa, increased 3.3 percent to 4,360 pence. Gold futures climbed to an 18-month high, passing $1,000 an ounce for the first time in more than six months as a weaker dollar and concern that inflation may accelerate boosted the precious metal’s appeal.

Phone Merger

Deutsche Telekom, Europe’s biggest telephone company, increased 1.5 percent to 9.60 euros and France Telecom gained 1.5 percent to 18.39 euros. The two companies agreed to merge their U.K. mobile-phone divisions to create the country’s largest cellular operator.

STMicroelectronics NV, Europe’s largest semiconductor maker, advanced 2.1 percent to 6.54 euros. Prices of the benchmark 1-gigabit computer-memory chip climbed to $1.71 yesterday, from as low as 58 cents in December, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for the chips.

Dassault Systemes SA rallied 4 percent to 37.08 euros. Deutsche Bank AG raised its recommendation on the company, whose design software is used by Toyota Motor Corp. and Boeing Co., to “buy” from “hold.”

A measure of travel and leisure companies on the Stoxx 600 added 2.5 percent, the biggest gain among 19 industry groups. Air France-KLM Group advanced 6 percent to 10.62 euros as Europe’s largest airline said it halted a decline in yields, or revenue per passenger, after cutting the number of seats to match supply with demand.

TUI, the biggest stakeholder in the Hapag-Lloyd shipping company, rose 6.3 percent to 6.63 euros after Hamburger Abendblatt said Hapag agreed with workers on cost cuts, making state aid more likely. Hapag will cut 120 of its 1,100 jobs in Germany by April 2010, the newspaper said.

InterContinental Hotels Group Plc climbed 6.4 percent to 817 pence. The owner of the Holiday Inn brand was raised to “outperform” from “neutral” at Credit Suisse.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.