European stocks close:

European stocks rose the most in a week after reports on U.S durable-goods orders and pending home sales beat estimates and speculation mounted that China will introduce additional economic stimulus.

Stocks climbed after a U.S report showed orders for durable goods climbed more than forecast in May, easing concern that U.S. manufacturing is faltering. Separate data showed more Americans than forecast signed contracts to buy previously owned homes last month.

In China, a commentary in the China Securities Journal said the country may introduce “more proactive” policies to ensure stable growth in the world’s second-largest economy. The policies may include stabilizing foreign trade, expanding infrastructure investment and reducing tax.

German Chancellor Angela Merkel faces demands from other euro-area nations for more drastic measures to fight the region’s sovereign-debt crisis, as EU leaders prepare for the two-day summit. One such proposal calls for collective debt sales through euro bonds.

National benchmark indexes advanced in all 18 western European markets before the European Union summit beginning tomorrow in Brussels. The U.K.’s FTSE 100 climbed 1.3 percent, France’s CAC 40 rose 1.4 percent and Germany’s DAX Index gained 1.3 percent.

A gauge of European bank shares rose 2.5 percent for the largest contribution to the Stoxx 600’s advance. Lloyds gained 3.5 percent to 31.16 pence after the Financial Times reported the lender may sell 630 branches to Co-Operative Group Ltd. as early as today.

Barclays Plc added 1.9 percent to 196.05 pence. The lender has agreed to pay 290 million pounds ($452 million) in penalties to settle U.S. and U.K. investigations into whether it sought to rig the London and euro interbank offered rates. Chief Executive Officer Bob Diamond and other executives will forgo their annual bonuses this year, the bank said.

K+S AG, Europe’s biggest potash producer, jumped 6.9 percent to 34.92 euros after analysts raised their ratings on the stock. Bank of America Corp. upgraded the stock to buy from underperform, while BHF-Bank raised its recommendation to overweight from market weight.

Salzgitter AG tumbled 4.9 percent to 32.50 euros, the lowest since September 2005, after saying its steel unit may not break even this year, citing “notably negative” impact on demand for rolled steel. The company said on May 15 it saw positive 2012 pretax earnings.