European stocks extended a two-month high as lenders rallied on speculation the European Central Bank will step up stimulus. U.S. index futures and Asian shares rose.
S&P 500 Index futures expiring in December rose 0.2% Monday, while the MSCI Asia Pacific Index advanced 0.4%.
The Stoxx Europe 600 Index added 0.3% to 346.17 at 11:34 a.m. in London, with the gauge's lenders contributing the most to the advance. The benchmark index gained 2.9% last week as Mario Draghi said the ECB needs to accelerate inflation and may broaden its asset-purchase program, while China cut key interest rates for the first time since 2012.
“Banks are outperforming on the prospect of economic stimulus measures,” said Guillermo Hernandez Sampere, who helps manage about 130 million euros ($161 million) at MPPM EK in Eppstein, Germany. “This is a good sign for their earnings, which suffered in the low interest rate environment.”
Banks in the Stoxx 600 rose 1.3% as a group. Banco Santander SA added 2.5% and Societe Generale SA gained 3.6%. Spain's IBEX 35 Index and France's CAC 40 Index climbed more than 0.9%, the biggest increases among 18 western-European markets.
As stocks advanced, the yield on 10-year Spanish government bonds fell below 2% for the first time on speculation the ECB will buy sovereign debt.
“The status quo is to invest with the belief that stimulus will continue to be supportive to equity prices,” Daniel Weston, a portfolio manager at Aimed Capital GmbH in Munich, wrote in an e-mail. “All corners of the world are stimulating. Investors are being forced to consider separating weak fundamentals with bullish stimulus.”
Stocks extended gains after a report showed German business confidence rose in November for the first time in seven months. The Ifo institute's business climate index, based on a survey of 7,000 executives, climbed to 104.7 from 103.2 in October. Economists had forecast a drop to 103. The DAX Index (DAX) increased 0.7%, heading for its highest close since July.
Automakers added 1.4% as a group. Peugeot SA gained 3.7% and Bayerische Motoren Werke AG added 1.7%.
Some shares moved on mergers-and-acquisitions activity. Friends Life Group Ltd. rallied 4.6% after Aviva Plc said it's in talks to buy the company. Aviva, Britain's second-biggest insurer, declined 5.1%.
BT Group Plc climbed 2.8% after the biggest U.K. broadband provider said it's in early talks with two mobile companies about an acquisition.
The Stoxx 600 climbed 11.4% from its low in October through the end of last week, sending its valuation to the highest level since December 2009. The gauge traded at 15.8 times estimated profit, data compiled by Bloomberg show.