European stocks gain on surprisingly good German data
European stock markets advanced and the euro was stronger against the dollar yesterday as dealers welcomed a surprise rebound in German business confidence while they watched another EU impasse unfold in Brussels.
The benchmark FTSE 100 index rose by 0.49 per cent to close at 5,819.14 points in London, Frankfurt’s DAX 30 gained 0.89 per cent to 7,309.13 points and the Paris CAC 40 added 0.87 per cent to 3,528.80.
The euro climbed to $1.2980 from $1.2884 late in New York on Thursday, its highest level since November 1.
On the London Bullion Market, gold prices rose to $1,734.50 an ounce from $1,731 on Thursday.
“The release of a stronger than expected German IFO survey added a clear upward push to the euro’s performance,” said Rabobank analyst Jane Foley.
Business confidence in Germany made a surprise return in November, data suggested yesterday, after falling for six months amid the eurozone debt crisis.
The Ifo economic institute’s closely watched business climate index rose to 101.4 points in November from 100.0 points a month earlier, contrary to analysts’ expectations.
Analysts surveyed by Dow Jones Newswires had anticipated the indicator slipping to 99.5 points.
“The German economy might have lost its invulnerability but today’s numbers indicate that the economy should not join the race to the bottom most other eurozone countries are currently in,” ING senior economist Carsten Brzeski commented.
The data came as a European Union summit wound up with no deal sealed for the bloc’s next long-term budget, with one EU official saying: “There is no agreement.”
Talks on a trillion euro budget for the 27-member bloc faltered over tensions between rich and poor states and Britain’s demands for austerity, and followed a breakdown in talks on how to resolve the Greek debt problem.
In New York, US stocks bounced higher as the market reopened after the Thanksgiving break, with trading tipped to be lighter than normal due to the holiday-shortened session.
In midday trading, the Dow Jones Industrial Average was up 1.34 per cent, the broad-market S&P 500 index advanced 1.30 percent and the Nasdaq Composite climbed 1.38 per cent.
In Asia, stock markets mostly closed higher yesterday following a rally in the previous session, while dealers awaited the new meeting on Greece’s bailout and the resumption of talks on the US fiscal cliff, dealers said.
Trade was subdued also owing to a public holiday in Japan that closed markets there, while dealers sat tight ahead of negotiations between US Democrats and Republicans to reach a deal on automatic tax hikes and spending cuts due to take effect on January 1.