European Stocks Gain After Two Weeks of Losses; BHP Billiton, Rio Advance

European stocks rose this week, snapping two weeks of losses, as reports showed manufacturing in the U.S., China and Europe expanded and the U.S. unemployment rate unexpectedly declined in January.

Basic-resource shares posted the best performance among 19 industry groups as a report showing that Chinese manufacturing expanded last month boosted metal prices. EFG Eurobank Ergasias SA and Alpha Bank SA led gains as Credit Suisse Group AG upgraded its stance on Greece. ARM Holdings Plc surged 13 percent this past week after posting fourth-quarter revenue that beat analysts’ estimates.

The benchmark Stoxx Europe 600 Index advanced 1.9 percent to 285.9 this week. The gauge has gained 3.7 percent so far this year as reports suggested the global economy continues to recover and investors speculated that European leaders will increase their efforts to contain the region’s debt crisis.

“We had really good manufacturing numbers that helped the market this week,” said Markus Huber, the head of German sales trading at ETX Capital in London. “Payrolls rose less than estimated, but this was due to the weather and job numbers are overall good with unemployment decreasing. Americans are negotiating to solve issues in Egypt, but tensions could be a concern for equity markets if they spread to other countries.”

In the U.S., a report showed manufacturing increased at the start of the year at the fastest pace since May 2004. The Institute for Supply Management’s factory index jumped to 60.8 in January from 58.5 in December. Readings greater than 50 mean that manufacturing expanded. Economists had forecast a reading of 58 for the gauge, according to the median projection in a Bloomberg News survey.

Chinese Manufacturing

In China, a purchasing managers’ index released by the country’s logistics federation gave a reading of 52.9 for January, exceeding the 50 level dividing expansion and contraction. A PMI from HSBC Holdings Plc and Markit Economics climbed to 54.5 from 54.4.

In Europe, manufacturing expanded more rapidly than estimated in January, accelerating to the fastest pace in nine months because of stronger output in Germany. A gauge of manufacturing in the euro area rose to 57.3 from 57.1 in December, Markit Economics said.

A separate report this week showed the U.S. jobless rate unexpectedly fell in January to the lowest level since April 2009, even as payrolls rose less than forecast because of winter storms. Another report in the U.S. showed consumer spending climbed more than forecast in December, concluding consumers’ strongest quarter in more than four years.

Egyptian Protests

All week, Egyptians protested in the cities of Cairo, Alexandria and Suez, demanding that President Hosni Mubarak step down immediately. The demonstrations continued even after Mubarak said he would not stand in September’s presidential election. The Egyptian goverment said that Hosni’s son, Gamal Mubarak, would not seek election either. European stocks limited gains on concern that the protests could move to other Arab states and some investors speculated that violent unrest could affect trade through the Suez Canal.

Per-share earnings have topped analysts’ estimates at 39 of the 70 companies in the Stoxx 600 that reported results since Jan. 10, according to data compiled by Bloomberg.

National benchmark indexes rose in 14 of Europe’s 18 western markets. France’s CAC 40 Index gained 1.1 percent, the U.K.’s FTSE 100 Index rose 2 percent, while Germany’s DAX Index advanced 1.6 percent. Greece’s ASE Index soared 4.4 percent.

BHP Billiton, Rio

BHP Billiton Ltd., the world’s largest mining company, gained 6 percent, pulling a gauge of basic-resource producers to the biggest gain among the Stoxx 600’s 19 industry groups. Rio Tinto Group, the world’s third-largest mining company, climbed 5 percent, while Anglo American Plc jumped 10 percent.

EFG Eurobank Ergasias and Alpha Bank surged 15 percent and 11 percent, respectively. Credit Suisse upgraded its stance on Greece to “benchmark” from “underweight,” saying “Greek equities look cheap.”

“The Greek equity market starts looking interesting given that Greece is the cheapest of the peripheral markets,” Credit Suisse analysts led by London-based Andrew Garthwaite said in a note.

ARM Holdings Plc soared 13 percent as the designer of semiconductors used in most smartphones, including Apple Inc.’s iPhone, said fourth-quarter revenue rose 34 percent to 113.9 million pounds ($183.3 million). Analysts had estimated revenue at 105.8 million pounds in a Bloomberg survey.

Deutsche Bank Gains

Deutsche Bank AG climbed 6 percent as Germany’s biggest bank said higher revenue from fixed-income and equities trading lifted fourth-quarter earnings at its investment bank.

Pretax profit at the division rose to 625 million euros ($848.4 million) from 398 million euros in the year-earlier period, according to a statement. Revenue from sales and trading climbed 30 percent to 2.44 billion euros, helped by a rebound in asset values, the Frankfurt-based company said.

TUI Travel Plc lost 7.2 percent after Europe’s largest tour operator said that canceled holidays in Egypt and Tunisia and the cost of repatriating some customers may cut second-quarter profit by as much as 30 million pounds.

Thomas Cook Plc slid 5.1 percent after its German brands, including its namesake unit, Neckermann Reisen, Bucher Last Minute and Oeger Tours, said they have stopped tours to Egypt until at least Feb. 14.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.