European stocks close:

European stocks rose, extending the Stoxx Europe 600 Index’s best start to a year since 1998, as Spanish and French borrowing costs dropped and a report showed initial jobless claims fell to a four-year low in the U.S.

Spain and France sold 12.5 billion euros ($16.7 billion) of bonds as yesterday’s European Central Bank loans to banks helped spur demand for debt. The rate on Italy’s two-year notes dropped below 2 percent for the first time since October 2010.

In the U.S., a Labor Department report showed initial jobless claims fell last week to a level matching a four-year low, dropping to 351,000. That’s the lowest since March 2008 and fewer than the average economist forecast of 355,000.

China’s manufacturing improved for a third straight month in February, signaling that the world’s second-biggest economy is maintaining momentum amid the euro area’s crisis.

National benchmark indexes climbed in all of the 18 western-European markets, except Norway. Germany’s DAX Index rose 1.3 percent. France’s CAC 40 Index gained 1.4 percent and the U.K.’s FTSE 100 Index added 1 percent.

Veolia Environnement jumped 15 percent to 10.55 euros, the largest gain on the Stoxx 600, after saying it’s in exclusive talks to sell Transdev, its mass-transit unit.

Cable & Wireless Worldwide Plc soared 15 percent to 31.98 pence after Tata Communications Ltd. said it may make a cash offer for the company and may decide on a transaction by the end of the month.

WPP Plc gained 3 percent to 827.5 pence after the world’s largest advertising agency reported that revenue rose to 10 billion pounds ($16 billion) in 2011. Analysts had estimated sales of 9.96 billion pounds. WPP predicted that revenue will grow 4 percent in 2012, faster than the industry average, because of its position in emerging markets.

PSA Peugeot Citroen slid 3.9 percent to 14.47 euros after Moody’s Investors Service cut the carmaker’s credit rating to junk. Peugeot announced a broad alliance with General Motors Co. yesterday that will include joint purchasing and vehicle development in an effort to revitalize their European operations.