European values rise on Chinese data

Eurostoxx 50:2,396.63 (+1.49%) Frankfurt DAX:6,332.93 (+1.82%) Paris CAC:3,269.99 (+1.40%)

EUROPEAN STOCK markets rallied yesterday, with the Stoxx Europe 600 Index extending a five-month high, amid speculation that China’s slowest economic growth in more than two years will lead to easier monetary policy. Investors also shrugged off the recent Standard Poor’s euro zone downgrades.

The euro zone rescue fund, the EFSF, which was downgraded by SP on Monday, successfully sold €1.501 billion of 182-day bills at an average yield of 0.2664 per cent, dispelling fears that the downgrades would lead to further deterioration of market sentiment.

DUBLIN

The Dublin market which ended the session in positive territory in line with the European trend, had a strong start to the session, boosted by a positive trading update from drinks company C&C which reiterated its full year guidance following a strong trading performance over the Christmas period.

C&C closed up 1.25 per cent at €3.14.

Smurfit Kappa was also a strong performer, on the back of news that its peer DS Group is to acquire SCA’s packaging business, seen as a positive sign of consolidation in the packaging industry.

It closed up almost 5 per cent to finish the session at €5.35.

DCC reversed the falls sustained on Monday, on the back of a negative trading update blamed on a disappointing season by its energy division. The stock closed the session out up 1 per cent at €18.35.

There were some buyers around for Ryanair, after a sluggish week for the stock last week. It closed up 2.7 per cent at €3.87.

Construction stocks continued to find favour with investors, with CRH staying above the €15.20 mark, and Grafton and Kingspan ending the session in positive territory.

LONDON

The United Kingdom’s FTSE 100 Index rose 0.65 per cent, helped by mining stocks.

The UK benchmark closed up 36.51 points, or 0.7 per cent, at 5,693.95, having earlier baulked just above the near-term 5,720 resistance level.

Miners tracked solid gains in metals prices after China’s economy grew at a pace better than some had expected, though expanded at its weakest pace in 2½ years in the latest quarter. Rio Tinto was among the top blue-chip risers, up 2.9 per cent, as the positive data helped investors shrug aside its near-flat iron ore production growth for the fourth quarter, which was weaker than some market expectations.

Nomura also weighed in on the company, saying it was one of its top picks among European miners.

India-focused refiner and power generator Essar Energy was the biggest FTSE 100 casualty after India’s Supreme Court ruled against it, meaning it will no longer benefit from a scheme by which it is able to defer sales tax.

Meanwhile the pound fell against the euro and the yield difference between two- and 10-year gilts was at its narrowest in nearly three years.

EUROPE

European stocks climbed, with the StoxxEurope 600 Index extending a five-month high, amid speculation that China’s slowest economic growth in more than two years will lead to easier monetary policy.

National benchmark indexes climbed in every western European market except Luxembourg and Iceland. Germany’s DAX advanced 1.7 per cent and France’s CAC 40 jumped 1.2 per cent.

Markets were buoyed by a report from the ZEW Center for European Economic Research in Mannheim which showed that German investor confidence jumped the most on record in January.

Daimler led carmakers higher, rallying 3.7 per cent. Rio Tinto Group advanced 2.8 per cent after the world’s third-largest mining company said fourth-quarter iron ore production rose to a record, driven by expansion at its mines and ports in Australia’s Pilbara region.

US

US stocks rose, sending the Standard and Poor’s 500 Index toward the highest level since July, boosted by the Chinese growth figures and a batch of corporate results.

Wells Fargo, the largest US bank by market value, gained 1.8 per cent amid record profits.

Sears Holdings surged 8.9 per cent, the most in the S P 500, on speculation that the company may seek to go private.

Citigroup lost 6.4 per cent after earnings unexpectedly declined 11 per cent.

Carnival tumbled 14 per cent after the Costa Concordia cruise ship ran aground off the coast of Italy on January 13th.

The SP 500 added 0.9 per cent to 1,300.98 at lunchtime, New York time, extending a two-week advance.

The Dow Jones Industrial Average gained 125.63 points, or 1.01 per cent, to 12,547.69.

– (Additional Reporting: Reuters/Bloomberg)