European stocks rose &strength the economic recovery enough to withstand the crisis

European stocks rose, erasing the losses that followed Lehman Brothers Holdings Inc. 's 2008 bankruptcy, amid speculation that the economic recovery is strong enough to withstand the crisis in the region of sovereign debt.

Volkswagen AG, the largest European carmaker, soared 3.7 percent after saying it expects sales in China to grow as much as 15 percent next year. Abertis Infraestructuras SA added 1.3 percent in the Sunday Times said that CVC Capital Partners Ltd. may bid for the Spanish motorway operator. Retailers retired as snow Christmas shopping interrupted.

The benchmark Stoxx Europe 600 Index rose 0.7 percent to 278.38 closing at 4:30 pm in London, the highest since September 12, 2008, the last trading day before the collapse of Lehman. The index has advanced 6.3 percent this month as U.S. reports showed that applications for unemployment benefits unexpectedly fell, builders started work on more homes and manufacturing in the New York region recovered more than expected.

"The start of 2011 could be very good and we still have a lot of driving market liquidity," said Michael Koehler, chief strategist at Landesbank Baden-Wuerttemberg in Mainz. "The latest economic data we have, particularly the USA, was generally very good and definitely not going to see a relapse. However, the issue of sovereign debt crisis is still not resolved."

Financial Crisis

The Stoxx 600 fell 44 percent through March 2009 as the collapse of Lehman Brothers fed the worst financial crisis since the Great Depression, as banks around the world to depreciation and loss of data from more than $ 1.8 billion .

France risks losing its top AAA grade as the debt crisis in Europe caused a wave of sales, which threatens to engulf the highest-rated borrowers in the region, with Belgium also faces a possible cut, analysts and investors, said.

"Every sovereign may be penalized in the next year," said Toby Nangle, who helps oversee 46 billion U.S. dollars as head of asset allocation at Baring Asset Management in London. "It would be a great thing if France was to be stripped of its AAA rating. I do not think that the probability of a cut is reflected in the market."

national reference rates rose in 14 of the 18 western European markets today. CAC 40 in France and Germany's DAX was up 0.5 percent. The UK 's FTSE 100 advanced 0.3 percent.

VW gains

Volkswagen shares rose 3.7 percent prefer to € 126.25 as the automaker said it expected group sales in China to grow 10 to 15 percent next year.

"The total market next year looks very healthy for us," said Weiming Soh, executive president of China automaker, in an interview at the Guangzhou Auto Show.

Moreover, Audi AG, Volkswagen's luxury brand, the car will probably beat its target for the A1 deliveries next year and may further increase production to meet demand for subcompacts, the head of the unit sales he said.

Abertis Infraestructuras rose 1.3 percent to € 13.63 in the Sunday Times reported that CVC Capital Partners, which bought a minority stake in Abertis earlier this year, is preparing a 12 million euros ($ 15,800,000,000) offer by the company.

Banco Popolare SC jumped 5.6 percent to 3.50 euros on speculation that the Fondazione Cariverona can buy shares through two of the lender to provide rights of millions of euros after Goldman Sachs Group Inc. updated stock.

888, Mobistar

888 Holdings Plc rose 18 percent to 57.75 pence, the biggest gain since its initial share sale in 2005. The online gambling company, said that in the early stages of talks with Ladbrokes Plc about a possible takeover bid.

Mobistar SA advanced 3.8 percent to € 47.42 seconds after Belgium, the largest mobile phone company has been upgraded to "buy" at Deutsche Bank AG.

Rhodia SA rose 7.2 percent to € 24.39, the highest price in almost three years. The specialty chemical company hopes to be able to defend their profit margins in 2011 the prices of raw materials, while a high level, being less stable, Investir, citing an interview with the CEO, Jean-Pierre Clamadieu .

Morgan Stanley raised the stock "overweight" from "equal weight."

Retail stocks were the only down 19 industry groups in the Stoxx 600 as the snow stopped Christmas shopping. Inditex SA, the largest clothing retailer, fell 2.7 percent to € 56.60. Lower Dixons Plc, the UK's largest consumer electronics retailer, fell 6.2 percent to 22.84 pence.

Metro Slide

Metro AG, Germany's largest retailer, lost 2.6 percent to € 54.37. Haniel & Cie GmbH is considering reducing its stake in the company, Business Week, citing unidentified people close to the company.

Haniel is to establish a "more balanced portfolio" by investing in small companies, the spokesman said Dietmar Bochert today. He refused to say whether the company plans to reduce its stake in Metro. Ruediger Stahlschmidt, a Metro spokeswoman, declined comment.

Gartmore Group Plc fell 8.6 percent to 95.75 pence after the fund manager in the UK which went on sale in November, said it is discussing a proposed acquisition with Henderson Group Plc, based on a "little off" of December 16 closing price of 98.75 pence. Henderson Group, which aims to expand its consumer business and operations in emerging markets, rose 0.1 percent to 130.6 pence.

Ingenico SA sank 5.6 percent to € 26.05 at the world's largest manufacturer of payment card terminals, said a bidder for the company has not been able to present a binding offer that is acceptable to its board.

Allied Irish Banks Plc fell 8.9 percent to 41 cents as the Sunday Business Post said the Irish government can use new powers to take full control of the lender as soon as this week. A spokesman for Irish Finance Ministry declined to comment on the report. Ronan Sheridan, a bank spokesman, also declined comment.