European stock markets rose yesterday, though off early highs, on news of upbeat economic data in Asian powerhouse China and surging investor confidence in the eurozone’s leading economy Germany.
The long holiday weekend apparently refreshed the bulls
In afternoon trade, London’s benchmark FTSE 100 index of leading shares rose 0.56 per cent to 5,689.20 points, the Paris CAC 40 gained 0.78 per cent to 3,249.79 points and Frankfurt’s DAX 30 leapt 1.38 per cent to 6,305.67 points.
In foreign exchange deals, the euro jumped to $1.2762 in afternoon London deals from $1.2667 late in New York on Monday, continuing its recovery after striking a 17-month low before the weekend.
“European stock markets enjoyed a strong early start to trading after Chinese GDP slowed less sharply than expected and German ZEW massively beat forecasts, triggering a rise in risk appetite from investors,” said City Index analyst Joshua Raymond.
US trading, which was closed on Monday for the Martin Luther King Day holiday, also shot higher in opening trade with the Dow Jones Industrial Average up 0.94 per cent, the broader S&P 500 rising 0.94 per cent and the tech-rich Nasdaq Composite adding 0.96 per cent.
“The long holiday weekend apparently refreshed the bulls,” said Andrea Kramer at Schaeffer’s Investment Research.
“Data from China is luring buyers from the sidelines, with traders digesting the country’s latest gross domestic product figures,” Mr Schaeffer said.
Dealers were largely shrugging off results from US banking giant Citigroup that posted a profit of $11.3 billion in 2011, slightly off analyst estimates.
Earlier Asian equities leapt higher, led by Shanghai and Hong Kong, as investors seized on the mounting evidence that China’s economy would avoid a much-feared hard landing despite slumping European and US demand.
China revealed yesterday that the world’s second-largest economy grew 8.9 per cent in the last quarter of 2011, which although slower than the previous three months was better than the 8.6 per cent expected.
Over the whole of 2011, growth slowed to 9.2 per cent from 10.4 per cent the previous year. Sentiment was also lifted by encouraging data on Chinese retail sales and manufacturing.
“Chinese GDP, industrial production and retail sales – all better than expected,” said GFT analyst David Morrison.