European stocks rose yesterday as easing tensions over Ukraine and positive US economic data helped the market extend the recovery rally that started in mid-March.

Spanish stocks outperformed the broader market, with lenders Banco Santander and BBVA both up 2.1 per cent, rallying after the Bank of Spain said the country’s economic recovery was on track. It saw GDP expanding by 1.2 per cent in 2014, above government forecasts.

Boosting the mood on both sides of the Atlantic, US data showed orders for long-lasting manufactured goods rebounded last month and shipments snapped two consecutive months of declines. Growth in the private sector meanwhile accelerated in March at a faster pace than in the previous month, reassuring investors on the country’s economic growth.

European companies with strong exposure to the US economy rallied, with Ray Ban sunglasses maker Luxottica up 2.9 per cent and advertising agency Publicis up 2.4 per cent.

Also helping sentiment, tensions between the West and Russia over Ukraine were easing yesterday, after US President Barack Obama and allies agreed to hold off on further economic sanctions.

A number of European blue-chips with big exposure to Russia featured among the top gainers, with Finnish tyre maker Nokian Renkaat up 2.8 per cent and Austrian lender Raiffeisen Bank International up 1.3 per cent.

The FTSEurofirst 300 index of top European shares added 0.7 per cent at 1,319.38 points. The benchmark index has risen 3.3 per cent since mid-March.

“The door is open for indexes to move back to 2014 highs, and we’re not far from these levels. There are just no signals of weakness, and the buying pressure is very powerful,” Aurel BGC chartist Gerard Sagnier said.

Spanish stocks surged, with Madrid’s IBEX benchmark gaining 1.5 per cent, reflecting investors’ bet that euro zone peripheral economies are picking up pace. So far this year, Italy’s FTSE MIB is up 11 per cent, Portugal’s PSI 20 up 15 per cent and Ireland’s ISEQ up 10 per cent.

Spain’s IBEX is up 2.3 per cent – hurt by worries over Spanish companies’ strong exposure to Latin America – but still outpaces the broad FTSEurofirst 300, which is flat on the year, while Germany’s DAX is down 1.1 per cent and UK’s FTSE 100 down 2.1 per cent.

Paras Anand, head of European equities at Fidelity Worldwide Investment, saw further big gains for European stocks, even if valuation ratios have already moved back to long-term averages.

“With investors shifting out of fixed income, the demand for European stocks will be growing in the next year, and that’s much more important than price-to-earnings ratios,” he said.

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