European stocks climbed for a third day, the longest winning streak for the Stoxx Europe 600 Index in five weeks, as a report showed that U.S. consumer spending rebounded last month.

National benchmark indexes advanced in 15 of the 18 western-European markets. France's CAC 40 climbed 1 percent, Germany's DAX added 0.6 percent and the U.K.'s FTSE 100 jumped 1.3 percent.

Alcatel-Lucent rose 6.4 percent to 1.40 euros. Morgan Stanley reiterated its overweight recommendation, which is similar to a buy rating, after Alcatel yesterday started a 550 million-euro ($716 million) convertible bond issue and bought back debt as part of its strategy to reduce financing costs. The brokerage said the plan would benefit shareholders.

Alcatel said as markets closed that it raised the amount of the sale to 629 million euros.

Drax surged 7.3 percent to 573 pence, after the U.K. Department of Energy and Climate Change set the subsidy rates for power from renewable energy plants. The government said it will pay pay biomass-conversion plants 105 pounds per megawatts per hour.

Drax brought the first converted biomass unit at its coal-burning plant into service in April.

DS Smith Plc climbed 5.4 percent to 252.7 pence. The paper company increased its dividend by 36 percent to 8 pence apiece, more than analysts had estimated. DS Smith also reported full-year revenue and earnings that beat analysts' estimates. The company added that the current year has started well, matching its expectations.

Subsea 7 tumbled 13 percent to 106 kroner after the oil-field services provider said it no longer expects full-year earnings to grow from 2012. The Norwegian company increased its estimate for the full-life loss on the Guara-Lula NE project off the coast of Brazil.