Stocks: Wednesday’s review

European stocks rose for the fourth time in five days as speculation central banks will take further steps to support the economic recovery outweighed the biggest contraction in U.K. manufacturing for three years.

A gauge of U.K. factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, fell to 45.4 last month from a revised 48.4 in June, Markit said today. That’s the lowest in 38 months. A reading below 50 indicates contraction.

The Purchasing Managers’ Index in China unexpectedly fell to 50.1 in July, the weakest in eight months, from 50.2 in June, a government report showed today. Fifty marks the dividing line between expansion and contraction.

The Federal Reserve will conclude a two-day policy meeting after the close of European trading today. The U.S. central bank has carried out two rounds of so-called quantitative easing since Lehman Brothers Holdings Inc. collapsed in 2008, buying $2.3 trillion in bonds to boost the economy.

Bearish options on European stocks have fallen to the cheapest levels compared with bullish ones in 19 months as traders bet that Draghi will deliver on his promise to save the euro. The ECB will hold its next policy meeting tomorrow.

Benchmark indexes rose in seven of the 17 western European markets open today. The U.K.’s FTSE 100 (UKX) gained 1.4 percent while Germany’s DAX slipped 0.3 percent. Markets in Switzerland were closed for a holiday.

Standard Chartered Plc added 3.6 percent to 1,517.5 pence, the largest advance since June 6, after the U.K. bank that gets most of its revenue from Asia posted an 11 percent increase in first-half profit.

Bayerische Motoren Werke AG slid 2.9 percent to 58.99 euros. The world’s biggest maker of luxury cars reported a 19 percent drop in second-quarter profit amid increased spending on new models and “intense” pricing competition.