European Stocks Climb on Commodity Prices; BP, BHP, Rio Advance

European stocks rose for a third day, led by BP Plc, BHP Billiton and Rio Tinto Plc, as oil gained and metals rallied to a record.

Mining shares in the Dow Jones Stoxx 600 Index are trading at an all-time high as investors bet advances in prices of industrial metals will continue to boost earnings. Energy stocks had their biggest gain in almost a month.

``We have an overweight exposure to both oil and mining companies,'' said Richard Robinson, who helps oversee the equivalent of $1.8 billion at Jersey-based Ashburton Ltd. ``China's growth story is still there and analysts are starting to increase their estimates for commodity prices.''

Allianz SE paced insurance companies higher, rising to the highest since 2002, after Merrill Lynch & Co. advised buying more shares of the insurer. Old Mutual Plc gained as its earnings beat analysts' estimates.

The Stoxx 600 rose 0.4 percent to 382.17 at the close in London. The Stoxx 50 added 0.4 percent and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, gained 0.6 percent.

Drug stocks limited gains after U.S. regulators delayed the introduction of a Novartis AG medicine and Novo Nordisk A/S said it won't seek to register a blood-clotting drug.

National benchmarks rose in 13 of 18 western European markets. France's CAC 40 added 0.8 percent. The U.K.'s FTSE and Germany's DAX climbed 0.5 percent.

Nickel climbed to a record on the London Metal Exchange for a second day and lead posted a new high for a seventh consecutive session. Copper also advanced, tracking gains in Asia. Imports of copper and copper products into China, the world's biggest user of the metal, jumped 44 percent in January from a year earlier.

Nuclear Program

BP, the region's second-largest energy company, rallied 1.9 percent to 545 pence. BHP, the world's biggest mining company, added 1.1 percent to 1,120 pence. Rio Tinto, the third largest, advanced 1.1 percent to 2940 pence.

``There is a long-term bull market in commodities,'' said David Hart, a senior analyst at Fat Prophets in London. ``We are looking for new highs and commodity producers will do well.''

Crude oil climbed for a fourth day in New York on concern the dispute over Iran's nuclear program may disrupt Middle East supplies. Oil gained as much 1 percent to $61.75 a barrel on the New York Mercantile Exchange.

Arcelor Mittal, the world's biggest steelmaker, gained 3.8 percent to 41.03 euros. Citigroup Inc. raised its share-price forecast to 45 euros from 40 euros, citing further increases in iron ore production.

Allianz, Europe's biggest insurer, rallied 3 percent to 169 euros after Merrill raised the stock to ``buy'' from ``neutral.''

`Restructuring Story'

Allianz's ``restructuring story is alive and well, with more near-term catalysts than we had expected,'' wrote Brian Shea, a London-based analyst at Merrill Lynch. Allianz last week reported a better-than-expected 60 percent increase in full-year earnings.

Separately, UBS AG raised its share-price estimate to 180 euros from 167 euros, saying cost-reduction programs in all Allianz divisions seem to be making better progress.

Old Mutual, Britain's third-biggest insurer, climbed 3.3 percent to 187.5 pence after it said second-half profit fell less than analysts estimated and raised its dividend as the Skandia AB acquisition paid off.

Net income in the last half of 2006 fell 5 percent to 456 million pounds ($895 million) from 480 million pounds. The company said it plans to increase its second-half dividend by 14 percent to 4.15 pence a share.

Novartis, Europe's third-largest drugmaker, dropped 1 percent to 71.45 Swiss francs after U.S. regulators requested more information on its experimental diabetes treatment Galvus, delaying the introduction of one of the company's most important new products.

The Food and Drug Administration wants another safety test of the medicine in patients with renal impairment. Novartis didn't say how long the new trial may take.

Insulin Maker

Novo Nordisk, the world's largest insulin maker, dropped 5.4 percent to 485.5 kroner. The company said it won't seek to register blood-clotting drug NovoSeven to treat strokes after data showed it didn't improve patients' recovery. The shares fell the most in almost two years.

Shares of Tandberg Television ASA surged 12 percent to 112 kronor after Ericsson AB, the world's largest maker of wireless network equipment, agreed to buy the company for about 9.8 billion kronor ($1.4 billion) in cash.

Ericsson has already acquired 11.7 percent of the outstanding shares in Tandberg Television.

``Companies are flush with cash after they cleaned up their balance sheets with cost cuts and they need to use this money by raising dividends, doing buy backs or making acquisitions,'' said Daniele Bottolo, who helps oversee the equivalent of $14 billion at Euromobiliare Asset Management in Milan.

Takeover Target

Cie. de Saint-Gobain SA, Europe's biggest supplier of building materials, rose 1.3 percent to 74.55 euros. Les Echos reported the company is considering selling its packaging unit for about 4 billion euros ($5.3 billion) as it refocuses on construction materials.

The unit, which represents 10 percent of the group's sales, may be put up for sale in the second half of the year and may attract private equity funds, the newspaper said.

TNT NV dropped 3.1 percent to 33.27 euros. Europe's second biggest express-package delivery company posted a 75 percent gain in fourth-quarter profit to 189 million euros ($249 million). Profit trailed the 243 million-euro median estimate of nine analysts surveyed by Bloomberg.

Persimmon Plc, Britain's biggest homebuilder by market value, rose 3.4 percent to 1,473 pence. The company posted a 15 percent increase in full-year profit to 396.4 million pounds as the purchase of Westbury Plc boosted homes sold in the U.K.

Analysts had expected profit of 395.9 million pounds on sales of 3.19 billion pounds.

source:www.bloomberg.com