European stock markets closed higher yesterday, extending gains on the back of better-than-expected US economic data and relief that the Greek debt crisis seems to be under control.
Dealers said early trade was tentative as investors consolidated the strong advance made as the Greek parliament approved a make-or-break austerity package to win fresh debt funding from the EU and IMF on Wednesday and Thursday.
They said early trade yesterday was tentative, however, after subdued manufacturing data in Britain, China and the eurozone but it then picked up after US figures surprised on the upside, sending Wall Street sharply higher.
In London, the benchmark FTSE 100 index of top shares closed up 0.74 percent at 5,989.76 points. In Frankfurt, the DAX rose 0.59 per cent 7,419.44 points and in Paris the CAC 40 added 0.63 per cent to 4,007.35 points.
Other European markets posted similar gains. Growth in private sector manufacturing across the eurozone hit a one-and-a-half-year low in June, hit by the impact of budget cuts and weaker exports, according to data from London-based research group Markit.
That, combined with weak numbers for Britain and China, reinforced the view that the global economy is slipping as the United States struggles to keep activity going in the face of a moribund housing market.“It is notable that the further slowdown in UK manufacturing activity in June was replicated across Europe and also in several other countries,” IHS Global Insight economist Howard Archer said.“This indicates that the global manufacturing rebound from the sharp drop in output suffered during the 2008-2009 recession is now running out of breath.
“This may well be influenced by inventory rebuilding having now largely run its course as well as slowing demand.”
However, data later yesterday showed the US manufacturing sector picked up in June, with the ISM purchasing managers index rising to a better-than-expected 55.3 in June from from 53.5 in May, when it dropped sharply.
In Paris, Renaud Murail at Barclays Bourse said the figures suggested “that fears of a US slowdown might have been exaggerated.“The slowdown in the world’s biggest economy was perhaps only temporary, linked to the Japanese disaster (of the earthquake and tsunami in March which) hit the Japanese economy and caused serious supply problems for the US tech and auto sectors,” Mr Murail said. In New York, share prices were higher for a fifth straight day as the ISM figures came through although trade was thin ahead of the July 4 holiday weekend. The blue-chip Dow Jones Industrial Average was up 0.97 per cent at around 1615 GMT while the tech-heavy Nasdaq Composite added 1.02 per cent.