Stocks: Monday’s review

European stocks advanced for a second day after German business confidence unexpectedly climbed and Federal Reserve Chairman Ben S. Bernanke said continued accommodative monetary policy is still needed.

Federal Reserve Chairman Ben S. Bernanke said that while he’s encouraged by the unemployment rate’s decline to 8.3 percent, continued accommodative monetary policy will be needed to make further progress.

Chancellor Angela Merkel gave her first indication that she is prepared to allow an increase in the debt-crisis firewall, saying that Germany could let the temporary and permanent rescue funds run in parallel.

National benchmark indexes rose in 15 of 18 western- European markets. Germany’s DAX rallied 1.2 percent, France’s CAC 40 climbed 0.7 percent, the U.K.’s FTSE 100 gained 0.8 percent while Spain’s IBEX 35 Index fell 0.7 percent.

EasyJet rallied 7.5 percent to 495.80 pence after Europe’s second-biggest airline forecast a first-half pretax loss of 110 million to 120 million pounds. The company had predicted a loss of 140 million to 160 million pounds.

Larger Irish rival Ryanair Holdings Plc advanced 2.6 percent to 4.43 euros, while Deutsche Lufthansa AG gained 1.6 percent to 10.47 euros.

Tullow Oil increased 6.6 percent to 1,570 pence after the U.K. explorer reported Kenya’s first oil discovery.

Banco Sabadell SA led Spanish lenders lower, falling 4 percent to 2.15 euros. Banco Bilbao Vizcaya Argentaria SA, Spain’s biggest bank, retreated 1.4 percent to 6.15 euros.

Italy’s Prime Minister, Mario Monti, warned that Spain could reignite the European debt crisis as euro-area ministers this week prepare a deal to strengthen the region’s financial firewall.

Spanish construction-related companies also declined in Madrid trading. Actividades de Construccion y Servicios SA dropped 4 percent to 20.27 euros and Sacyr Vallehermoso SA retreated 2.3 percent to 2.47 euros.

U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level since May 2008, after Federal Reserve Chairman Ben S. Bernanke said that accommodative monetary policy is still needed to spur jobs.

Equities rose as Bernanke said in a speech that while he’s encouraged by the unemployment rate’s decline, the economy still needs help. The number of Americans signing contracts to buy previously owned homes held in February near an almost two-year high, a sign that the real estate market may be stabilizing.

Gains in stocks were also driven by speculation the European Union will increase the size of its bailout fund. European finance ministers meet March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall. Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel.

Dow 13,241.63 +160.90 +1.23%, Nasdaq 3,122.57 +54.65 +1.78%, S&P 500 1,416.51 +19.40 +1.39%

Apple jumped 1.8 percent to a record $606.98. Chief Executive Officer Tim Cook visited the world’s most populous country, where store openings have trailed a forecast the company made two years ago. Cook had “great meetings” with Chinese officials, Carolyn Wu, a Beijing-based spokeswoman, said by phone, without identifying the officials.

Arena Pharmaceuticals Inc.soared 25 percent to $3.01, the highest level since September 2010. The weight-loss pill maker faces an advisory panel on May 10 as Food and Drug Administration staff said in a report today that obesity treatment manufacturers may need to study the heart risks of their medicines before U.S. regulators weigh approval.

Edwards Lifesciences Corp. rallied 5.9 percent, the most in the S&P 500, to $75.51. The company’s Sapien device replaces damaged aortic heart valves as well as surgery, without cracking open the chest or triggering higher rates of stroke or death after two years, a company-funded study found.