European stocks close

European stocks advanced for the first time in three days amid conflicting reports that France and Germany have reached a deal on expanding the euro area’s rescue fund. German Chancellor Angela Merkel said yesterday that the euro-area summit on Oct. 23 will mark an “important step,” though not the final one, in solving the debt crisis. The comments marked the second time in two days that she sought to lower expectations. The Guardian newspaper reported that Germany and France have agreed to boost the region’s rescue fund, known as the European Financial Stability Facility, to 2 trillion euros ($2.8 trillion) from 440 billion euros. In contrast, the Financial Times Deutschland said German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that the EFSF’s firepower may be increased to a maximum of 1 trillion euros.

National benchmark indexes climbed in 11 of the 18 western European markets. The U.K.’s FTSE 100 Index gained 0.7 percent, France’s CAC 40 Index increased 0.5 percent and Germany’s DAX Index advanced 0.6 percent.

A gauge of bank shares rebounded from a four-day decline as the cost of insuring against default on European corporate debt retreated. France’s Natixis rallied 2.8 percent to 2.25 euros, while Commerzbank, Germany’s second-largest lender, rose 4.7 percent to 1.63 euros.

Software AG surged 12 percent to 30.45 euros, its biggest gain since 2009. Germany’s second-largest maker of business software confirmed its full-year sales target after third- quarter operating profit rose to 71 million euros.

BSkyB gained 5.1 percent to 710 pence after the U.K.’s biggest pay-TV broadcaster reported a 16 percent increase in first-quarter operating profit to 295 million pounds ($466 million) as the company sold more products to its existing subscribers. That beat the average analyst estimate of 286.5 million pounds.

Diageo Plc jumped 4 percent to 1,331 pence after the world’s largest distiller reported first-quarter sales that topped analyst forecasts, boosted by growth in Latin America, Asia and Africa.

Аccor SA advanced 2.5 percent to 22.62 euros after Europe’s largest hotel company reported a 2.7 percent gain in third- quarter sales to 1.62 billion euros, matching estimates, as more guests stayed at its economy hotels.

Hochtief rallied 3.7 percent to 52.98 euros after Goldman Sachs raised its recommendation for the company to “conviction buy” from “neutral.”

Alcatel-Lucent SA sank 7.7 percent to 1.96 euros as Oddo Securities and Jefferies Group Inc. lowered their recommendations for the French phone-equipment maker to “neutral” and “underperform,” respectively.

Home Retail Group Plc sank 17 percent to 99.5 pence after the owner of U.K. Homebase outlets said first-half profit fell 70 percent as Britons spent less at its Argos catalog unit.