European stocks close:

European stocks rose, posting their best monthly start to a year since 1998, as most countries in the region agreed to tighter budget controls, outweighing worse- than-estimated economic data.

European Union leaders, meeting in Brussels yesterday, agreed on a fiscal-discipline treaty that allows for sanctions on high-deficit states and requires members to enact laws to limit budget shortfalls. Britain and the the Czech Republic refused to sign the pact.

The policy makers also decided to bring the region’s permanent bailout fund, the European Stability Mechanism, into operation on July 1, a year before schedule.

Greece aims to complete debt-swap talks with bondholders this week. Prime Minister Lucas Papademos told reporters after summit that he is “strongly committed” to reaching a deal.

German unemployment dropped more than economists forecast to a two-decade low in January. The number of people out of work fell a seasonally adjusted 34,000 to 2.85 million, the Federal Labor Agency said. That’s the biggest drop since March.

National benchmark indexes rose in 15 of the 18 western European markets today. The U.K.’s FTSE 100 climbed 0.2 percent, Germany’s DAX advanced 0.2 percent, and France’s CAC 40 gained 1 percent.

Oil gained after the December industrial output rose more than forecast in Japan, the third-biggest crude consumer. BP, Europe’s second-largest oil producer, gained 2.7 percent to 470.85 pence. Shell and Total SA gained 0.5 percent to 2,240.5 pence and 1.5 percent to 40.41 euros, respectively.

ThyssenKrupp, Germany’s largest steelmaker, rose 2.7 percent to 21.67 euros in Frankfurt after agreeing to sell its Inoxum stainless steel unit to Outokumpu Oyj. The deal valued the German company’s unit at about 2.7 billion euros. ThyssenKrupp will retain a 29.9 percent stake in the business, receive 1 billion euros in cash, and transfer liabilities of 422 million euros for Inoxum to Outokumpu. Outokumpu fell 15 percent to 6.27 euros in Helsinki.

ARM Holdings jumped 2 percent to 609.5 pence. The maker of processors for Apple Inc.’s iPads and iPhones said fourth- quarter revenue climbed 21 percent as the company increased the number of licenses sold for smartphones and tablet computers.