European Stocks Advance as Investors Bet on Central-Bank Action

Bloomberg News

European stocks rose as investors bet central banks will add to measures unveiled by the region’s governments to contain the sovereign-debt crisis and data from China and Japan fueled optimism Asia will drive global growth.

Invensys Plc advanced 2.2% after a report said China South Locomotive & Rolling Stock Corp. may make an offer. Aviva Plc, the U.K.’s second-biggest insurer, jumped 3.6% after it named a new chairman. Rhoen Klinikum AG slumped 7.9% after Fresenius SE failed in its 3.1 billion-euro bid to buy the company.

The Stoxx Europe 600 Index climbed 1.3% to 254.31 at 2:36 p.m. in London. The gauge rallied 1.9% last week, trimming its second-quarter decline to 4.6%, as the region’s leaders eased repayment rules for Spanish banks and relaxed conditions for possible aid to Italy.

“Investors will focus on the European Central Bank decision this week,” said Guillaume Chaloin, a fund manager at Meeschaert Asset Management in Paris, which oversees $2.5 billion in assets. “There is a rotation toward cyclical stocks, such as oil and technology, with the idea that if we’ve found a solution to the debt problem, there will be less negative impact on industries sensitive to the economy.”

The volume of shares changing hands on Stoxx 600 companies was 37% more than the average of the last 30 days, data compiled by Bloomberg showed.

National benchmark indexes advanced in all of the 18 western European markets except Iceland. France’s CAC 40 climbed 1.3% and the U.K.’s FTSE 100 added 0.7%. Germany’s DAX increased 1.3%.