European stock markets closed higher yesterday on the back of growing optimism about the economic outlook and solid corporate results but the euro slipped on weaker-than-expected German data.
Dealers said sentiment has improved in recent weeks, supported by the belief that the US economy is finally turning the corner, with company earnings giving a further boost.
At the same time, the sting appears to have gone out of the eurozone debt crisis although no one believes the underlying problems have been resolved as yet and they will require much more work, they said.
Markets were following events in Egypt where there seemed to have been some progress in the government meeting protesters’ demands for reform, they added.
In London, the FTSE 100 index of leading shares closed up 0.89 per cent to 6,051.03 points. In Paris, the CAC 40 gained 1.08 per cent to 4,090.80 points and in Frankfurt the DAX put on 0.93 per cent to 7,283.62 points.
The euro fell after data showed German industrial orders tumbled 3.4 per cent in December, partially erasing a gain of 5.2 per cent in November and well above forecasts for a drop of 1.5 per cent.
In late trade, the euro was at $1.3567, having earlier traded to near $1.36 and compared with $1.3583 in New York late on Friday.
The dollar edged up to ¥82.39 from ¥82.19 on Friday.
Despite the poor headline German figures which dented the euro, the markets had expected a drop following November’s strong performance and both officials and analysts believe the underlying picture remains strong.
For the stock market, City Index strategist Joshua Raymond said “investors have started the week on the front foot, hunting commodity-related equities such as miners and energy firms, helping to charge European indices higher.
“It’s been a very positive start to the week with buyer demand spread evenly across the board helping each key equity sector to post early gains,” he said.
Miners got an additional boost after copper rocketed to historic highs at $10,160 per tonne.
“Naturally with the price of copper extending gains yet again, this has attracted buyers in the heavyweight mining sector,” Raymond said in London.
In New York, the blue-chip Dow Jones Industrial Average was up 0.72 per cent at around 1700 GMT and the tech-rich Nasdaq Composite added 0.87 per cent.
“The US equity markets are following last week’s solid advance,” Charles Schwab analysts told clients.
“Stocks are getting some support from eased concerns regarding the political unrest in Egypt and a slew of merger and acquisition news,” they added.
In Paris, Xavier de Villepion at Global Equities said markets were also comforted by overall positive corporate results, giving a boost to some stocks which have up until now lagged the advance.
Elsewhere in Europe, Amsterdam and Brussels each rose 1.19 per cent, Madrid put on 0.63 per cent, Milan was up 0.77 per cent and Swiss stocks gained 0.41 per cent.
In Asian trade earlier Monday, Tokyo added 0.46 per cent and Sydney edged up 0.12 per cent but Hong Kong finished 1.49 per cent lower. Shanghai was closed for the Lunar New Year holiday.