By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stocks rallied on Tuesday, as
investors cheered stronger-than-expected euro-zone retail sales for
the euro zone and took inspiration from gains a day earlier in the
U.S., where the Dow Jones Industrial Average closed at its
second-highest level ever.
The Stoxx Europe 600 index added 1.3% to 292.61, setting it on
track for the highest closing level since summer 2008.
Shares of outsourcing company Serco Group PLC jumped 9.3%, after
the firm reported a rise in full-year profit and lifted its
dividend. See: Serco year pretax net up; dividend increased.
Deutsche Post AG put on 4.9%, after the German logistics and
mailing company posted higher 2012 profit and said it expected
earnings to rise in 2013. See: Deutsche Post expects higher 2013
earnings.
For the broader European market, investors keyed off gains in
the U.S. and in Asia, where bourses rebounded after tighter Chinese
property mortgage rules sent markets lower. Shanghai stocks ended
2.3% higher, while U.S. indexes nudged closer to all-time highs.
See: Stock gain lifts Dow average to 2nd highest level.
U.S. stock futures on Tuesday pointed to a higher open on Wall
Street. See: Stock futures track global markets up; ISM ahead.
Investors were also paying close attention to European
purchasing managers' indexes along with retail sales ahead of
Thursday's European Central Bank policy meeting.
The Markit euro-zone PMI composite output index came in at 47.9
in February, above an earlier estimate of 47.3 but below January's
reading of 48.6. See: Euro-zone final Feb. PMI shows deeper
downturn.
Retail sales surprised to the upside, with the January reading
for the euro zone showing a 1.2% improvement, above market
expectations.
Expectations for a rate cut at Thursday's meeting have been
rising in recent weeks, with some analysts seeing Tuesday's data
potentially pressuring the ECB.
"In all, further signs that the downturn in the euro zone is
slowing come as a relief. But with activity remaining very weak,
particularly outside Germany, the ECB will remain under pressure to
implement further support policies this week and beyond," said
Jennifer McKeown, senior European economist at Capital
Economics.
Banks posted some of the biggest gains, with Standard Chartered
PLC rising 2.7% in London, BNP Paribas SA up 1.7% in Paris and
Banco Santander SA (SAN) adding 1.2% in Madrid.
The U.K.'s FTSE 100 index climbed 0.8% to 6,393.38, while
France's CAC 40 index gained 1.4% to 3,759.76.
Germany's DAX 30 index traded 1.6% higher at 7,815.59.
Outside the major indexes, shares of TomTom NV (TMOAY) advanced
4.3%. The Amsterdam producer of navigation equipment said that
Toyota Motor Corp. (TM) would install TomTom's HD Traffic product
as standard equipment on all vehicles with Toyota's Touch & Go
navigation-and-entertainment systems.
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