European stocks reversed earlier losses yesterday after news of a surprise gain in German business confidence.
The benchmark FTSE 100 index in London rose 0.93 per cent to close at 5,598.48 points, the DAX in Frankfurt drove up 1.84 per cent to 6,298.30 points and the CAC 40 in Paris gained 1.94 per cent to 3,782.48 points.
Elsewhere in Europe, Zurich rose 0.91 per cent, Amsterdam 1.51 per cent, Milan 1.70 per cent and Madrid 2.15 per cent after the cabinet approved a tough austerity budget for 2011 aimed at reassuring nervous financial markets.
The budget aims to rein in Spain’s massive public deficit.
Investors were also tracking Wall Street where the Dow Jones Industrial Average was up 1.61 per cent and the Nasdaq rose 1.89 per cent in afternoon trading after Nike reported strong earnings and the manufacturing came out with some strong data.
“The US equity markets have moved to near the best levels of the day in early action after a report on durable goods showed solid upward revisions to the previous month’s figures,” said analysts at investment firm Charles Schwab.
Meanwhile, in Europe a survey measuring German business confidence showed a surprise rise to levels last seen in mid-2007, suggesting an expected slowdown will not mean a return to recession in Europe’s leading economy.
The latest figures “reinforce the view that the German economy will prove quite resilient against any downward influences from a weakening global economy,” IHS Global Insight senior economist Timo Klein said.
In foreign exchange deals, the euro rose against the dollar, helping gold to record highs.
The European single currency rose to $1.3476 late in London from $1.3312 late on Thursday in New York.
Banks were in focus in London after news that the British government’s Independent Commission on Banking will consider whether to break them up to increase competition and help prevent another financial meltdown.
Shares in Royal Bank of Scotland (RBS) ended the day up 2.77 per cent at 49.29 pence, Barclays rose 1.80 per cent to 311.75 pence and Standard Chartered jumped 3.63 per cent to 1,929.50 pence.
But miners all took a beating after Swiss bank UBS gave a negative appraisal of several market leaders. Antofagasta dropped 2.48 per cent to 1,181 pence and Anglo American slipped 0.61 per cent to 2,535 pence.
Ben Critchley, a trader at financial spread betting firm IG Index, noted the earlier fall in stocks and said: “It’s certainly been a choppy week for equity markets but the prospect of a double dip (recession) is looming yet again.”
Asian stock markets were mixed earlier yesterday as a series of poor data out of Europe and the US raised concerns over the global recovery.
Tokyo’s Nikkei stock index ended 0.99 per cent lower at 9,471.67 points but Hong Kong was up 0.33 per cent at 22,119.43 on bargain hunting.