Stocks: Monday’s review

European stocks advanced the most in more than three weeks as test results showed the stress to the Spanish banking system was less than estimated and as U.S. manufacturing expanded for the first time in four months. Spain’s banks have a capital deficit of 59.3 billion euros ($76 billion), stress tests conducted by New York-based management consultancy Oliver Wyman showed last weekend. That was less than the 62 billion euros Wyman estimated in June that the lenders would need.

Spain commissioned the stress test as part of terms to obtain a European bailout of as much as 100 billion euros for its banks after more than 180 billion euros of losses linked to real-estate loans. Wyman tested the banks’ ability to handle an extreme scenario -- a three-year economic contraction -- even as the government debated whether to seek a wider rescue package.

Credit Agricole SA rose 7.8 percent after starting talks to sell its unprofitable Greek unit.

International Consolidated Airlines Group SA climbed 3.4 percent after the International Air Transport Association raised its 2012 global airline-profit forecast.

Banco Popular Espanol SA slumped the most in two months after announcing a capital-increase plan.

FTSE 100 5,820.48 +78.41 +1.37%, CAC 40 3,433.6 +78.78 +2.35%, DAX 7,328.14 +111.99 +1.55%

U.S. stocks rose, following the biggest weekly decline since June in the Standard & Poor’s 500 Index, after a measure of manufacturing beat economists’ forecasts and concern about Europe’s debt crisis eased. Stocks extended gains after data showed American factories are holding up in the face of a global economic slowdown that’s weakened manufacturing from Asia to Europe. The Institute for Supply Management’s factory index rose to 51.5 last month from 49.6 in August. Economists in a Bloomberg survey projected a September reading of 49.7. Federal Reserve Chairman Ben S. Bernanke renewed a pledge to sustain record stimulus even after the U.S. expansion gains strength, while saying policy makers don’t expect the economy to remain weak through 2015.

Equities pared gains as Apple Inc., the world’s most valuable company, reversed an earlier advance. Bank of America Corp., Hewlett-Packard Co. and Alcoa Inc. rallied at least 1 percent. Goldman Sachs Group Inc. increased 3.2 percent after a report said the stock will rise as much as 25 percent within a year. Ceradyne Inc. jumped 43 percent after 3M Co.  agreed to buy the company for $860 million to expand its energy unit.

S&P 500 1,443.59 +2.92 +0.20%

NASDAQ 3,109.68 -6.55 -0.21%

Dow 13,508.2 +71.07 +0.53%