Stocks: Friday’s review

European stocks posted their biggest weekly rally of the year as speculation rose that Congress will agree on a U.S. budget that avoids the so-called fiscal cliff and China’s manufacturing expanded.

Obama said at a press conference in Bangkok on Nov. 18 that he is “confident” of striking a deal over a new budget. House Speaker John Boehner, a Republican, said after the close of European trading on Nov. 16 that he held constructive talks with the president and would accept increased government revenue and spending cuts. Congress returns on Nov. 26 after the Thanksgiving recess.

Euro-area factory output contracted less than economists had estimated in November, a Markit Economics report on Nov. 22 showed. The index based on a purchase managers’ survey climbed to 46.2 from 45.4 in October, beating the average economist estimate of 45.6.

In Germany, the Ifo institute said its business climate index, based on a survey of 7,000 executives, increased to 101.4 from 100 in October, the first gain in eight months. Economists predicted a drop to 99.5, according to the median estimate of economists.

National benchmark indexes increased in all of the 18 western European markets this week, except Iceland. The U.K.’s FTSE 100 rose 3.8 percent, France’s CAC 40 added 5.6 percent and Germany’s DAX Index climbed 5.2 percent.

Nokia soared 31 percent, the biggest weekly gain since 1992. The Finnish mobile-phone maker said Nov. 19 it received reports that its Lumia 920 model had sold out in Germany. Danske Bank A/S analyst Ilkka Rauvola advised investors to buy the shares, saying in a note dated Nov. 22 that Nokia will sell 36 million smartphones that use Microsoft Corp.’s Windows software in 2013, higher than an earlier estimate of 23 million.

Alcatel-Lucent jumped 13 percent after people familiar with the matter said Nov. 22 the network equipment vendor is in talks with Goldman Sachs to get a loan to strengthen its balance sheet. Before this week, the company’s shares had declined 35 percent from the beginning of the year to trade near the lowest price since at least 1992.

Swiss Life Holding AG surged 15 percent, the largest increase since March 2009. Analysts estimated before its investor day on Nov. 28 that the life insurer may write down almost half the value of its German broker unit AWD Holding AG.

Fugro NV tumbled 12 percent after the world’s biggest surveyor of deepwater oilfields cut its full-year profit forecast and said Chairman Arnold Steenbakker will step down.