European stocks had their biggest weekly advance in a year as UBS AG's plan to replenish its capital fueled speculation financial companies will weather credit-market losses.

UBS, the region's largest bank by assets, rallied the most in more than six years after saying it seeks to raise 15 billion Swiss francs ($14.9 billion) in a rights offer. Credit Suisse Group and UniCredit SpA also paced gains by financial shares. Infineon Technologies AG, Europe's second-biggest semiconductor maker, led technology stocks higher after Elpida Memory Inc. of Japan said it will raise chip prices.

The Dow Jones Stoxx 600 Index jumped 4.1 percent to 319.15. The gauge has fallen 12 percent this year on concern the collapse of U.S. subprime mortgages and a slowdown in the world's largest economy will hurt global profit growth. More than $2.8 trillion in value was erased from global equities in the first quarter. "We're at a crossroads after a very difficult start to the year,'' said Philippe de Cholet, vice president of Cholet Dupont Gestion SA, which oversees $3.1 billion in Paris. ``A number of elements lead us to think that the worst may be behind us.''

Plans by UBS and Lehman Brothers Holdings Inc. to raise capital have fueled speculation banks will recover from $232 billion in mortgage-related losses. Federal Reserve Chairman Ben S. Bernanke said this past week that he doesn't expect the central bank will have to rescue another Wall Street firm.

Indexes paired some gains after a report on April 4 showed the U.S. lost jobs for a third consecutive month in March and the unemployment rate rose to the highest level since September 2005.

National Benchmarks

National benchmarks climbed in all 18 western European markets. Germany's DAX Index added 3.1 percent. France's CAC 40 gained 4.4 percent. The U.K.'s FTSE 100 advanced 4.5 percent. The Stoxx 50 rallied 5 percent, and the Euro Stoxx 50, a measure for the euro region, increased 4.2 percent.

Shares in the Stoxx 600 are valued at an average 12.1 times estimated earnings, near the lowest since at least January 2002.

"It seems as if the market has integrated the darkest of scenarios,'' said David Ganozzi, managing director at Fidelity Gestion in Paris, which oversees $4.7 billion. "Potential for further declines is limited. It would be dangerous to be underweight stocks considering the low valuations."