European stock markets push higher despite concern over Germany

Europe’s leading stock markets pushed higher yesterday as investors digested news of falling German investor confidence and lower British inflation.

The FTSE 100 index of top shares jumped 1.41 per cent to 5,350.55 points by the end of trade in London. Frankfurt’s DAX 30 climbed 1.57 per cent to 6,206.4 points while in Paris the CAC 40 index added 1.82 per cent to 3,663.13 points.

The Stoxx 50 index of top eurozone shares increased by 1.45 per cent in value to reach 2,737.37 points.

US stock markets traded higher on the back of encouraging economic data and positive quarterly earnings from retail giant Wal-Mart.

In New York, the blue-chip Dow Jones Industrial Average was up 1.39 per cent at around 1715 GMT while the tech-rich Nasdaq Composite index added 1.64 per cent.

Elsewhere in Europe, Amsterdam rose 1.64 per cent, Brussels rose 1.98 per cent, Madrid gained 1.08 per cent, Milan rose 1.27 per cent and Swiss stocks were up 1.18 per cent.

Earlier in Asian trade, Tokyo lost 0.38 per cent, Hong Kong fell by 0.12 per cent, Sydney closed up 0.71 per cent, and Shanghai rose 0.38 per cent.Blue-chips rallied on European markets even though a closely watched survey showed investor confidence has fallen sharply this month in Germany – Europe’s biggest economy.

“The best performing sector today has been the banking sector after Irish and Spanish debt auctions went off without a hitch early this morning,” said Michael Hewson, an analyst at CMC Markets.

Germany’s ZEW’s monthly sentiment indicator, based on a survey of 284 analysts and institutional investors, fell 7.2 points to 14.0 points, below the indicator’s historical average of 27.3 points and a much sharper drop than feared.

“The decrease... indicates that the enormous growth observed in the second quarter is unlikely to continue,” the ZEW institute said, with weakening conditions abroad likely to hit exports, Germany’s main growth driver.

Last week, data showed that German gross domestic product (GDP) surged in the second quarter at its fastest rate since reunification 20 years ago, with output soaring 2.2 per cent compared to the previous three-month period.

This followed figures showing that exports, the backbone of the German economy, rocketed 28.5 per cent year-on-year in June to reach €86.5 billion, close to pre-crisis levels.

Yesterday, official data showed that the prices of goods in Britain rose at a slightly slower pace in July compared with June on an annual basis, largely thanks to falling transport costs.

Consumer Price Index 12-month inflation, the government’s target measure, fell to 3.1 per cent last month from 3.2 per cent in June, the Office for National Statistics said.

But the level remained far above the Bank of England’s 2.0-per cent target rate owing to higher food costs.