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Europe: Stocks rise after holiday amid central bank optimism

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[FRANKFURT] European stocks rose, as markets reopened after the Easter holiday, amid investor confidence that central banks will continue to support economies.

The Stoxx Europe 600 Index advanced 1.5 per cent to 403.76 at 4:30 pm in London. The equity benchmark has jumped 18 per cent this year to within 0.4 per cent of its 2000 record.

Federal Reserve Bank of Atlanta President Dennis Lockhart said Monday that he favours pushing out the central bank's first rate rise beyond the next two meetings, echoing Fed president William Dudley of New York, who said the path of increases is likely to be "shallow" once it starts to tighten. Minutes of the central bank's latest meeting, after which it noted that "growth has moderated," are due for release on Wednesday.

"The Fed would rather err on the side of caution," said Jasper Lawler, a market analyst at CMC Markets Plc in London. "They're dovish by nature. They don't want to make a mistake of lifting off too soon."

US Labour Department data showed on Friday that nonfarm payrolls increased last month by the least since December 2013. Deutsche Bank AG said this supports its view "that the Fed will struggle to raise rates in 2015." Data on Tuesday showed a gauge of new orders recorded by manufacturers and service providers in the euro area in March rose to the highest level since 2011, London-based Markit Economics said. Employment increased at the fastest pace in more than 3 1/2 years.

A measure of energy shares posted the biggest gain of the 19 industry groups on the Stoxx 600 following Monday's surge in oil prices. Seadrill Ltd. jumped 15 per cent and Tullow Oil Plc climbed 5.5 per cent. Commodity producers also advanced, with Glencore Plc adding 3.2 per cent and Anglo American Plc rising 2.8 per cent.

Among stocks moving on corporate news, TNT Express NV soared 28 per cent after agreeing to a 4.4 billion-euro (S$6.55 billion) takeover offer from FedEx Corp. TNT investors will receive 8 euros a share in cash, 33 per cent more than the closing price on April 2.

PostNL NV, which holds about a 15 per cent stake in TNT, jumped 13 per cent.

International Consolidated Airlines Group SA dropped 1.4 per cent and Deutsche Lufthansa AG slid 2.1 per cent after JPMorgan Chase & Co downgraded the airlines, citing flat margins and competition from Middle East rivals.

BLOOMBERG