European Stocks Advance as FTSE 100 Hits 6,000; Xstrata Rallies

Jan. 4 (Bloomberg) — European stocks climbed, extending the benchmark Stoxx Europe 600 Index’s biggest two-day advance in a month, as mining shares rallied in London.

Antofagasta Plc and Xstrata Plc led a gauge of basic resource companies higher as copper jumped to a record. BP Plc surged 5.8 percent after lawyer Kenneth Feinberg said half of the $20 billion Gulf of Mexico oil spill fund should cover claims. Carrefour SA gained 1.5 percent as BofA-Merrill Lynch Global Research recommended the retailer.

The benchmark Stoxx 600 rose 0.8 percent to 280.12 at 4:30 p.m. in London, extending yesterday’s biggest gain since Dec. 21 as economic data heightened speculation that last year’s rally in equities will continue in 2011. The U.K.’s FTSE 100 Index jumped 1.7 percent to 6,000.54 after the market was closed for the New Year holiday yesterday.

“I am still optimistic,” said London-based Andrew Popper, chief investment officer at SG Hambros Bank Ltd. in a Bloomberg Television Interview. “The move towards riskier assets should continue. We are looking at equities as presenting a positive outlook and other asset markets as well, especially commodities.”

National benchmark indexes advanced in 10 of the 18 western European markets. France’s CAC 40 gained 0.3 percent, Germany’s DAX fell 0.3 percent and Switzerland’s SMI Index increased 0.1 percent.

Antofagasta, Xstrata

Antofagasta Plc, owner of copper mines in Chile, rose 0.6 percent to 1,621 pence. Xstrata, the world’s fourth-largest copper producer, gained 0.6 percent to 1,514.5 pence and Kazakhmys Plc increased 2 percent to 1,647 pence.

The Stoxx 600 Basic Resource Index climbed as much as 2.7 percent to the highest level since July 2008 as copper rallied as much as 1.3 percent to $9,728 a metric ton on the London Metal Exchange, catching up with yesterday’s rise to an all-time high in New York.

BP jumped 5.8 percent to 492.35 pence after Feinberg, the lawyer paying victims of BP’s Gulf of Mexico oil spill, said $10 billion may be enough to cover claims for economic losses.

Feinberg said on Bloomberg Television on Dec. 31 that it is too early to project how much of the fund will be needed to pay individuals and businesses.

Separately, the Daily Mail newspaper reported Royal Dutch Shell Plc had considered a takeover bid during the crisis. Mark Salt, a spokesman for BP in London, declined to comment on the report. Shell’s press department wasn’t immediately available for comment when contacted by phone.

Shell shares gained 1.1 percent to 2,161 pence as crude oil traded near a 27-month high.

Carrefour, Carnival

Carrefour rose 1.5 percent to 32.545 euros in Paris after BofA Merrill Lynch raised its recommendation for the world’s second-largest retailer to “buy” from “neutral” as analysts said the stock was oversold.

Carnival Plc gained 3.7 percent to 3,092 pence after Deutsche Bank AG upgraded the world’s biggest cruise-line operator to “buy” from “hold,” saying the company’s final earnings results indicated a “healthy outlook” for 2011.

Cairn Energy Plc increased 2.6 percent to 431.5 pence after the company hired two rigs for oil exploration off Greenland and won a $900 million credit line, ensuring that drilling plans for 2011 are on track.

Cairn, Eni

The Edinburgh-based company rented the Leiv Eiriksson and Ocean Rig Corcovado, both operated by Ocean Rig, to drill four wells. The debt facility was provided by Standard Chartered Bank, Bank of Scotland Plc, Credit Agricole SA, HSBC Holdings Plc and Societe Generale SA.

Eni SpA increased 1.2 percent to 16.62 euros after Petroleo Brasileiro SA, Brazil’s state-controlled oil company, confirmed it’s in talks with the Italian energy company to buy a stake in Galp Energia SGPS SA.

Diario Economico today reported that Petrobras, as the company is known, is offering about 3.5 billion euros ($4.7 billion) for Eni’s 33 percent stake in Galp. The newspaper did not say how it obtained the information.

Galp shares slid 0.8 percent to 14.82 euros in Lisbon trading after rallying 4.2 percent yesterday.

Piraeus Bank SA led Greek stocks lower, slumping 12 percent to 3.15 euros after the nation’s fourth-biggest lender set the price of shares on sale in its 807 million-euro rights offering at 1 euro apiece. That is 43 percent below the theoretical value of the shares excluding the rights as of yesterday’s close.

Ericsson, Fiat

Ericsson AB paced a retreat in Stockholm, dropping 3.2 percent to 76.45 euros after Credit Suisse Group AG downgraded the world’s biggest maker of mobile-phone networks to “neutral” saying the shares offer “less compelling upside.”

Fiat SpA surged 6.5 percent to 7.48 euros, the best performance on Italy’s FTSE MIB Index. Morgan Stanley initiated coverage of the stock with an “overweight” rating and a price estimate of 10 euros.

“Closer integration with Chrysler Group LLC, turning around Italian losses, and keeping Brazil on track will be key,” the brokerage said in a note. “We are optimistic in all these areas.”

The spin off of Fiat Industrial SpA, whose main assets are truck and tractor makers Iveco and CNH Global NV, became effective yesterday, with every Fiat shareholder owning one Fiat share and one Fiat Industrial share.

Eutelsat Communications surged 4.9 percent to 29.03 euros. The world’s third-largest satellite company was raised to “outperform” from “neutral” at Exane BNP Paribas. The brokerage set Eutelsat as its favorite short-term pick among satellite companies.

FCC Probe

Fomento de Construcciones y Contratas SA dropped 3 percent to 18.495 euros. Cemex SAB, the largest cement maker in the Americas, said that Spain’s National Antitrust Commission sent its Spanish unit a formal complaint in November, alleging that Cemex Espana may have violated antitrust rules by taking part in a cartel based in the Navarre region.

A spokesman for Spanish regulators, who declined to be named, said the agency will issue a final ruling by this summer. It must rule 18 months after it started the probe in December 2009 when it raided Cemex, Holcim Ltd. and Cementos Portland, a unit of FCC.

–With assistance from Maryam Nemazee in London. Editors: Jason Carey, Peter Branton.

-0- Jan/04/2011 16:34 GMT

To contact the reporter on this story: Sarah Jones in London at [email protected].

To contact the editor responsible for this story: David Merritt at [email protected].