By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets turned higher
Tuesday, taking inspiration from the U.S. where markets climbed
after top hedge-fund manager David Tepper said he remains
bullish.
Germany's benchmark index extended gains to an all-time closing
high, shaking off weaker-than-expected investor-confidence
data.
The Stoxx Europe 600 index added 0.4% to 305.66, closing at the
highest level since June 2008.
The index has recently defied worries about sluggish growth in
large parts of Europe, as cheap liquidity from central banks and
relatively lackluster returns in the bond markets lured investors
into equities globally.
Most of major country-specific benchmarks have been climbing to
multiyear highs, and Frances Hudson, global thematic strategist at
Standard Life Investments, said the rally is poised to
continue.
"Unless we get something really disturbing markets will go
higher," she said. "We're at the end of the earnings season and the
news driver moves from the corporate sector to be focused more on
the political and economic arena. It's a bit more risky, but there
aren't any major political upsets at the moment."
Among upbeat company news on Tuesday, shares of Severn Trent PLC
soared 14% after the water-utility firm said it received a "very
early stage" bid approach, although no proposal has been made.
Deutsche Post AG gained 3.9% after the company reported a rise
in first-quarter adjusted profit of more than 45%.
Tepper pep talk
The broader European stock markets erased earlier losses after
U.S. markets showed positive moves, after Tepper told CNBC that
he's "definitely bullish" on stocks and that "every place is the
place to be in stock markets around the world."
"So, today's afternoon reversal clearly suggests markets are
getting comfortable with the view that although Fed stimulus
measures will have to come an end at some point, with a backdrop of
a recovering U.S. economy, perhaps withdrawal from the stimulus
pills won't be as crippling as some had previously thought," said
Ishaq Siddiqi, market strategist at ETX Capital in a note.
Last week, The Wall Street Journal reported that the U.S.
Federal Reserve is mapping out a strategy for exiting its easing
program, although the timing remains uncertain.
Most indexes in Europe traded in negative territory in the
beginning of the session, as investors were looking at economic
data in Germany. The ZEW economic sentiment indicator, a gauge of
investor confidence, inched 0.1 point higher to 36.4 in May, but
still well below the 40 print expected by analysts. The reading
comes after the index slumped to 36.3 in April, stoking worries
about Germany's economic performance and the country's ability to
pull the rest of Europe of sluggish growth.
The data contrasted reports out last week, when German trade
data and industrial-production figures beat market expectations and
fueled hopes the economy is picking up after a soft patch earlier
in the year.
Upbeat euro-zone data
Meanwhile, industrial production in the euro zone climbed 1% in
March compared with February, helped by a solid rise in energy
production and durable consumer goods. Analysts expected a rise
around 0.4%.
"The increase in IP over the past two months represents the
first back-to-back gains in output since July/August last year.
This set of data is, therefore, an encouraging sign of a possible
stabilization in output," James Ashley, senior European economist
at RBC Capital Markets, said in a note.
"However, we caution that the details of the report are a little
more mixed than the headlines might suggest, with much of the
strength on the month coming from the (erratic) energy sector," he
added.
The report came a day ahead of the first estimate of economic
growth in the euro zone for the first quarter, with most analysts
expecting to see the region remaining in contraction.
Movers
The DAX 30 index rose 0.7% to 8,339.11 in Tuesday's trade,
extending gains into a sixth straight day and closing at an
all-time high.
Car makers posted some of the biggest gains, with Daimler AG up
3.1%, Volkswagen AG 2.1% higher and BMW AG adding 1.7%.
Commerzbank AG slumped 6.3% after announcing a 2.5 billion euro
($3.25 billion) capital increase to repay German state aid and
boost the bank's equity capital. The price of the new shares will
be EUR4.5 a share, a 55% discount to Monday's closing price.
In France, European Aeronautic Defence & Space Co. rose 3%
after the firm kept its earnings outlook for 2013, but reiterated
that the Airbus A350XWB long-range aircraft program remains
"challenging."
The CAC 40 index put on 0.5% to 3,966.06.
The U.K.'s FTSE 100 index rose 0.8% to 6,686.06, marking a ninth
straight day of gains.
BG Group PLC added 3.5%, after the energy firm said it is
shifting focus back to exploration and liquefied natural gas, while
cutting back spending on big developments.
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