Stocks: Tuesday’s review

European stocks rose as two German lawmakers said the country is open to Spain seeking a precautionary credit line from Europe’s rescue fund, and German investor confidence advanced more than expected in October.

Germany is open to Spain seeking a precautionary credit line from Europe’s rescue fund, two senior coalition lawmakers said. The comments by Michael Meister, a deputy caucus leader of Chancellor Angela Merkel’s Christian Democratic bloc, and Norbert Barthle, her party’s budget spokesman, signal a reversal of Finance Minister Wolfgang Schaeuble’s position that Germany is opposed to a full sovereign bailout for Spain.

FTSE 100 5,870.54 +64.93 +1.12%, CAC 40 3,500.94 +80.66 +2.36%, DAX 7,376.27 +115.02 +1.58%

BNP Paribas SA and Deutsche Bank AG paced gains among banking shares. Deutsche Bank and Commerzbank gained 5.1 percent to 34.60 euros and 4.1 percent to 1.56 euros, respectively.

Rio Tinto gained 2.7 percent to 3,053 pence. The company reported a 6 percent increase in third-quarter iron-ore output to 52.6 million metric tons, beating the mean analyst estimate of 50.65 million tons. Iron-ore output from Australia’s Pilbara region rose to a quarterly record.

GKN Plc fell 3.3 percent to 205 pence after the maker of car drive shafts warned that weakening demand in some European automotive and industrial markets will affect fourth- quarter profit.

U.S. stocks rallied, giving the Standard & Poor’s 500 Index its biggest gain in a month, as industrial production rose more than forecast and corporate earnings topped estimates.

Output at factories, mines and utilities rose 0.4 percent in September after a 1.4 percent decline in August that was the biggest since March 2009, the Federal Reserve reported today in Washington.

Johnson & Johnson, the world’s biggest maker of health-care products, climbed 1.4 percent to $69.55. Third-quarter earnings beat analyst estimates on rising demand for medical tools acquired with the Synthes purchase and new prescription medicines. The drugmaker raised its 2012 earnings forecast to $5.05 to $5.10 a share excluding certain items, after trimming the forecast last quarter by 5 cents to $5 to $5.07 a share.

Kroger Co., a supermarket operator, increased 4.3 percent to $24.43. Jefferies Group Inc. upgraded the stock to buy from hold.

Coca-Cola Co. slumped 0.6 percent to $37.90. The world’s largest soft-drink maker said third-quarter revenue advanced less than 1 percent to $12.3 billion, trailing the $12.4 billion average of analysts’ estimates compiled by Bloomberg.

Clearwire Corp. tumbled 17 percent to $2.23. People with direct knowledge of the situation said Sprint Nextel Corp. has no immediate plans to take over Clearwire. Sprint, which agreed to sell a 70 percent stake to Softbank Corp. for $20.1 billion, was unchanged at $5.69.

At the close:

Dow 13,552 +128 +0.95%

Nasdaq 3,101 +37 +1.20%

S&P 500 1,455 +15 +1.03%