European shares rose yesterday, boosted by stronger-than-expected US economic growth, but also notched up their biggest monthly loss since February 2009 on worries over Greece's deficit, and curbs on banks.
The FTSEurofirst 300 index of top European shares rose one per cent to close at 1,011.89 points, its biggest one-day gain since January 4. Over this month, it fell 3.2 per cent, its worst monthly performance since February 2009.
"There's good macro news coming out of the US," said Franz Wenzel, strategist at AXA Investment Managers, in Paris. "We're also strongly convinced the market will focus on the top line growth coming through in earnings. But it may take time for the market to push higher. Confidence has been heavily undermined, with the bad news from Greece."
Banks were among the top gainers, with DJ STOXX European banking index rising 1.8 per cent after falling in the past two days partly on concerns about Greece's fiscal health.
US President Barack Obama's plans to curb banks' risk-taking has also hurt the sector over the month. Yesterday, BNP Paribas, Banco Santander, Barclays, Deutsche Bank, HSBC and UniCredit ended the day between 1.4 and four per cent higher. Greek bank shares, major losers in recent days on worries about borrowing costs, gained. National Bank and Alpha Bank rose five and 8.8 per cent respectively.
Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 ended the day between 0.8 and 1.4 per cent higher.
The US economy, the world's biggest, grew at a faster-than-expected 5.7 per cent pace in the fourth quarter, the fastest for more than six years, as businesses reduced inventories less aggressively, the Commerce Department said yesterday.
Forecasts in a Reuters survey had put the growth rate at 4.6 per cent. The upbeat mood was further reinforced by data from the Institute for Supply Management-Chicago, showing business growth, and the Reuters/University of Michigan Surveys of Consumers' survey.
Wall Street was higher around the time European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were up between 0.2 and 0.7 per cent, having pared gains from earlier.
Most miners and energy companies rose. Metals and oil prices gained following the US economic data, though these gains were later surrendered. Anglo American, Eurasian Natural Resources Corp., Rio Tinto and Xstrata rose between one and 2.7 per cent.
BHP Billiton, the world's biggest miner, rose 1.3 per cent. The miner has approved $1.93 billion in capital expenses to spruce up rail and port facilities.
Among the oils, Royal Dutch Shell, Repsol and Total added 0.5 to two per cent. Among individual shares, BMW, the world's biggest premium automaker, rose 4.8 per cent after it forecast a modest rise in car sales this year and confirmed it expected a 2009 pre-tax profit despite the global economic crisis.
Daimler rose 3.4 per cent, boosted by an upgrade from HSBC. Over the week, the pan-European index fell 1.3 per cent and it is down 5.8 per cent from the 15-month high it reached on January 11. However, it is still up 56.8 per cent from its record low in March 2009.