European stocks gained for a fourth day

- European stocks gained for a fourth day as concern eased that a credit crunch will curb economic and profit growth.

Societe Generale SA and Man Group Plc led financial shares higher. BHP Billiton Ltd. rallied after the world's biggest mining company posted record full-year profit. Telekom Austria AG, the largest Austrian phone company, advanced after earnings beat analysts' estimates.

The Dow Jones Stoxx 600 Index added 1.7 percent to 368.62. That gave the gauge its longest winning streak in more than three months, after the Federal Reserve reduced its discount rate Aug. 17.

``Calm has returned to the market,'' said Jacques Porta, who helps manage $180 million at Ofivalmo Patrimoine in Paris. ``It's a good opportunity to buy stocks. Investors are expecting a rate cut.''

National benchmarks increased in all of the 18 western European markets. The U.K.'s FTSE 100 rose 1.8 percent and Germany's DAX added 1 percent. France's CAC 40 jumped 1.8 percent. Europe's Stoxx 50 added 1.3 percent and the Euro Stoxx 50, a measure for the euro region, rose 1.2 percent.

Stocks extended gains following a rally in early trading in the U.S. on renewed takeover speculation. Asian markets advanced for a third day as investors bet the Fed will lower its overnight lending rate at the central bank's Sept. 18 meeting.

Volatility Declines

The Chicago Board Options Exchange Volatility Index has dropped 24 percent since Aug. 16, when it surged to the highest since October 2002. Investors' expectations for price swings in German stocks, as measured by the VDAX Index, have declined 13 percent from Aug. 16 when it reached its highest since June 2006. The VDAX gauges the implied volatility in DAX options.

Societe Generale, France's third-largest bank, gained 1.2 percent to 119.29 euros. Man Group, the world's largest publicly traded hedge fund company, rallied 5.1 percent to 481.5 pence.

Interest-rate futures show traders give a 56 percent chance the Fed will lower its overnight lending rate to 4.75 percent by its Sept. 18 meeting, compared with 90 percent yesterday.

Senate Banking Committee Chairman Christopher Dodd said yesterday Fed Chairman Ben S. Bernanke agreed to use ``all of the tools at his disposal'' to restore stability in financial markets.

Good Remedy

``The idea is not only will the Fed lower rates, but will it lower them more than expected,'' said Jacques-Antoine Bretteil, who manages about $405 million at International Capital Gestion in Paris. ``For stocks, this is the only way to break out of the crisis. It's a good remedy, an electroshock.''

Northern Rock Plc, Britain's worst-performing bank stock this year, climbed 3.7 percent to 728 pence.

Liquidity constraints will be ``short-lived'' and the shares are ``attractive given the outlook for the business,'' analysts at Cazenove in London wrote in a report. Northern Rock is the U.K. mortgage lender most reliant on capital markets.

Eni SpA rallied 3 percent to 24.35 euros after Credit Suisse Group lifted its recommendation on shares of Italy's biggest oil company to ``outperform'' from ``neutral.'' That was the stock's biggest one-day jump in more than two years.

``Assuming the global environment is healthy, our arguments in favor of a longer duration of the oil cycle are growing,'' the Credit Suisse analysts wrote in a note.

Commodities Rally

BHP Billiton rose 4.9 percent to 1,365 pence. Profit gained to $13.4 billion from $10.45 billion because of increasing demand from China and higher commodity prices. The credit crunch is unlikely to derail the commodities rally driven by emerging economies such as those of China and India, BHP said.

Rio Tinto Group, the world's third-largest mining company, added 6.8 percent to 3,280 pence. Anglo American Plc, the second- biggest, added 5.7 percent to 2,752 pence. Basic resources stocks rose more than any of the 18 industry groups in the Stoxx 600.

Telekom Austria advanced 2.2 percent to 18.46 euros. The company reported a smaller-than-anticipated decline in second- quarter profit on Internet subscriber additions and the acquisition of eTel.

DNO ASA surged 11 percent to 10.77 kroner. The first overseas company to produce oil in Iraq since the industry was nationalized disclosed a bid of as much as $700 million for its Iraq assets. It also reported positive test results from wells in the country.

ISoft, Air Liquide

ISoft Group Plc jumped 9.3 percent to 70.5 pence. The stock rose to a one-year high after IBA Health Ltd. raised its offer for the U.K. maker of hospital software to 166.3 million pounds ($329 million), outbidding Germany's CompuGroup Holding AG.

Air Liquide SA increased 3.9 percent to 91.5 euros. Eurazeo SA raised its stake in the world's second-biggest maker of industrial gases to 5.5 percent, the French private equity firm said.

Banca Italease SpA surged 7.8 percent to 15.54 euros. The Italian lender whose board was fired after derivatives losses said its biggest shareholders plan to nominate Credit Suisse's Lino Benassi as a director.

Sampo Oyj jumped 4.9 percent to 20.96 euros. Finland's largest financial-services company said it will buy back as much as 4.8 percent of its own shares.