European shares at 3-month high, UK banks jump

London - European equities traded at a three-month high, with Britain’s lenders rallying after passing stress-test results.

Barclays and Lloyds Banking Group climbed more than 2.6% after the Bank of England (BoE) said all seven major lenders passed the examination. That pushed the FTSE 100 Index to post one of the biggest gains in western-European markets, with the volume of shares changing hands about two-thirds greater than the 30-day average.

The Stoxx Europe 600 Index rose 0.1% at 12:09 as much as 0.5% earlier. The gauge climbed for a second month in November, taking its rebound from a low in September to 14%.

Anticipation for further European Central Bank (ECB) stimulus and confidence that the US economy is strong enough to weather higher borrowing costs helped spur the rally. Data today showed euro-are manufacturing accelerated in November, extending a tepid recovery that sets the scene for more central-bank action.

“It’s a pretty good start so far,” said Michael Hewson, the London-based chief market analyst at CMC Markets. “Looking at the best performance, not surprisingly it’s the banks.

What we’ve got here at the moment is a little bit of a goldilocks scenario with improving economic data, further stimulus in the pipeline and pretty positive outlook with respect to the Bank of England stress test.”

Britain’s FTSE 100 climbed 0.4%, with a gauge tracking the nation’s shares heading for its biggest advance since October.

As shares rebounded from their lows earlier this year, the optimism led to fund managers increasing their allocation to global stocks in November.

The timing was no coincidence: equities have wrapped up the year with gains on all but five occasions since 1988, with December posting the biggest and most frequent increases of any month, data compiled by Bloomberg show.

On the first day of December, travel-related shares gained. Hotel chain Accor SA and tour operator TUI AG rose more than 2.6% after tumbling last month. BHP Billiton rebounded 1.4% after closing at its lowest price since 2008. Automakers climbed for a fifth day after a weakening of the euro.

Gases supplier Linde AG slumped 14%, heading for its biggest plunge since 1999, after cutting its earnings targets for the third time in just over a year. Safran SA dropped 2.3% after France lowered its stake in the jet engine maker.