European stocks close:

European stocks climbed, with the Stoxx Europe 600 Index extending its largest weekly rally since November 2008, after a report showed that the U.S. unemployment rate fell below 9 percent last month. A Labor Department report showed unemployment in the U.S. unexpectedly dropped in November to a two-year low, while employers added fewer workers than projected and earnings eased, indicating the labor market is making limited progress.

The jobless rate dropped to 8.6 percent, the lowest since March 2009, the release showed. Payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary- help agencies, after a revised 100,000 increase in October that was more than initially estimated. The median estimate in a Bloomberg News survey had called for a gain of 125,000.

German Chancellor Angela Merkel said earlier today that only fiscal union will tackle the euro area’s debt crisis at its roots, as she used a speech to lawmakers in Berlin to outline her position before a European Union summit on Dec. 9. The euro area needs fiscal oversight that’s “binding” and punishes states that persistently breach debt and deficit rules.

A European proposal to channel loans from national central banks through the International Monetary Fund may deliver as much as 200 billion euros ($268 billion) to fight the debt crisis, two people familiar with the negotiations said.

National benchmark indexes climbed in every western- European market except Norway. France’s CAC 40 Index advanced 1.1 percent and the U.K.’s FTSE 100 Index rose 1.2 percent. Germany’s DAX Index increased 0.7 percent.

Commerzbank surged 11 percent to 1.50 euros as Die Welt said Germany’s second-biggest bank could generate about 1 billion euros by retaining profit through June 30. The lender could boost its core capital by 3 billion euros by offloading some 30 billion euros in risk-weighted assets, the newspaper said, citing options that its supervisory board will discuss today. The lender could also generate as much as 6 billion euros by converting hybrid capital, according to Die Welt. The German newspaper cited banking officials.

Banking shares were the best-performing industry today, soaring 4.3 percent. HSBC Holdings Plc rose 3 percent to 510.7 pence in London, while BNP Paribas SA surged 9.4 percent to 31.60 euros in Paris.

BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest mining companies (BLT), paced gains in commodity stocks, rising 4 percent to 2,000.5 pence and 1.3 percent to 3,346.5 pence, respectively. The industry was among the best performers in the Stoxx 600 this week, surging 12 percent. Aluminum, copper, lead, nickel and zinc all climbed on the London Metal Exchange today.

Daimler AG advanced 1.7 percent to 33.93 euros. A report from Autodata Corp. yesterday showed that U.S. light-vehicle sales accelerated to their fastest pace in 2011. Daimler sells more than 17 percent of its vehicles in the U.S., Bloomberg data shows. Separately, Daimler plans to cut production costs by 10 percent annually in 2012 and 2013, Reuters reported, citing Wolfgang Nieke, a works council member.

ThyssenKrupp AG fell 6.4 percent to 17.80 euros, the biggest decline in the Stoxx 600 today, after Germany’s biggest steelmaker posted a fiscal full-year loss because of 2.9 billion euros of impairments charges, mostly after it delayed the construction of a plant in Brazil.