WEEKLY UPDATE – Stocks in Stockholm rose during the week as confidence in the economic recovery strengthened further.

Stocks in Stockholm rose on Friday. Confidence in the economic recovery strengthened further and European stocks rose for a fourth day, extending the biggest weekly advance in a year for the Stoxx Europe 600 Index.

The OMX Stockholm 30 index closed up 1.48 percent. Compared to a week ago the index was up 4.75 percent.

“People have been overdoing their economic fears without looking at the underlying corporate stories,” London-based Justin Urquhart Stewart at 7 Investment Management told Bloomberg. “There has been a realization that valuations are getting cheap. For the time being gains could have a bit further to go. Your risk now is being out of it.”

Swedish industrial output rose 2.3 percent in May from the previous month and 12.4 percent compared with May 2009 for the largest annual rise since 2000, the national statistics office reported. The agency said the annual gain was driven by the automobile sector and base metals.

Shares in Swedish banks rose Fridag after Norway’s DnB NOR said second quarter profit surged as loan write-downs shrank. The same day Finance Minister Anders Borg said that he belives that Swedish banks will stand strong in stress tests that are being conducted across Europe. Nordea rose 2.8 percent Friday while SEB was up 1.9 percent, Swedbank 1.9 percent and Handelsbanken 1.2 percent.

Lundin Mining rallied 26 percent compared to last week after being upgraded by a number of investment banks.

Hexagon, the world’s biggest maker of measuring instruments, soared 7.7 percent on Wednesday after it agreed to buy US-based Intergraph Corp for 2.13 billion dollar.

On Monday Anders Borg raised the outlook for the country’s economy. The government now forecast GDP to increase by 3.3 percent this year, up from 2.5 percent in its previous prognosis.

“Sweden's economy is strong and appears as an obvious spot of light in Europe where many countries are facing large problems”, the finance minister said.

Sentiment in stock markets was also lifted by an upgrade to global growth by the International Monetary Fund, projecting world economy will grow by 4.6 percent this year, on the back of "stronger activity" during the first half of 2010.

"The timing could not be better as fears over the sustainability of the global economic recovery had manifested in the equity and bond markets," analyst Kimberly DuBord at Briefing.com told AFP. "Improving market sentiment could lift oversold sectors hurt by excessive pessimism."

Since the turn of the year the OMX Stockholm 30 index is up 8.03 percent.

This article has been published at The Swedish Wire and Nasdaq OMX Nordic.