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Europe stocks rose as data beats forecast and ends recession

europeanstockEuropean stocks advanced for a third straight week as data showing the euro area emerged from the longest recession on record amid speculation the Federal Reserve will reduce monetary stimulus.

The benchmark Stoxx Europe 600 Index increased 0.1% to 306.36 this past week, extending its yearly advance to 9.5%. The Euro Stoxx 50 Index added 1% for a sixth week of gains. Gross domestic product in the 17-nation euro area expanded 0.3% in the second quarter after a six straight periods of contraction, according a report on Aug. 14. That exceeded the median estimate of 0.2% growth in a Bloomberg survey of economists.

“The global economy is improving, which means company profitability will improve, which means equity as an asset class should attract new money,” Kevin Lilley, head of European Equities at Old Mutual Global Investors, said by phone for Bloomberg. “For the first time in two years, with a continuation of positive news flows, the man on the street might go out and purchase that car he’s been thinking about, the new television or remodel his house.”

The Fed is close to reducing its $85 billion in monthly debt purchases at its meeting on Sept. 17-18, according to two thirds of economists surveyed by Bloomberg from Aug. 9 to Aug. 13. In a survey last month, half of economists predicted a reduction at next month’s meeting.

National benchmark indexes advanced in 13 of the 18 western European markets this week. France’s CAC 40 Index climbed 1.2% and Germany’s DAX Index increased 0.6 percent. The U.K.’s FTSE 100 Index sank 1.3%, while the Swiss Market Index retreated 0.2%.

In corporate news, Thomas Cook Group Plc tumbled 9.9% for the biggest drop in five months. UBS AG removed the 172-year-old U.K. tour operator from its list of preferred stocks, citing the “high-profile media coverage” of the violence in Egypt.

TUI Travel Plc, Europe’s largest tour operator, retreated 4.6%, the most in four months.

Airlines sank as crude oil advanced. EasyJet plunged 8.7% and International Consolidated Airlines Group SA fell 4.4%. Ryanair Holdings Plc lost 8.3% for the biggest drop in more than 2 years.

Italian banks gained as Banca Monte dei Paschi di Siena SpA and Unione di Banche Italiane SCPA rose at least 12%. GAM Holding AG jumped the most in almost four years as the asset manager said first-half profit more than tripled. Fresnillo Plc and Randgold Resources Ltd. increased at least 9% as prices for gold and silver rallied.

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