By Sara Sjolin, MarketWatch
LONDON (MarketWatch)--European stock markets rallied on
Wednesday, after U.K. data showed more people are finding jobs, and
Chinese economic-growth data beat forecasts.
The Stoxx Europe 600 index rose 1.3% to close at 342.97, marking
the biggest one-day percentage gain since April.
Among top gainers, shares of Rio Tinto PLC (RIO) added 2.8%
after the miner said it produced record-volume iron ore in its
fiscal first half.
Other resource firms were also on the rise, after China recorded
second-quarter growth of 7.5%, bringing the economic expansion rate
in line with the government's target of 2014 growth at "about
7.5%."
Shares of French oil giant Total SA (TOT) gained 1.7%, and miner
Anglo American PLC picked up 3.3%.
The broader U.K. stock market was also strong after a round of
mostly upbeat data on the labor market. Unemployment for the three
months to May dropped to 6.5% from 6.6% in April, but wage growth
slowed to its weakest pace since comparable records began in 2001.
The Bank of England has signaled it wants to see a stronger rise in
incomes before raising rates, and the weak salary data could ease
pressure on the central bank to hike interest rates this fall.
Philip Shaw, chief economist at Investec Securities, said in a
note that the weak earnings growth seems to be biased down by a
surge in incomes a year ago due to a change in taxation. If the
current level of pay remains at these levels, earnings growth
should recover in August, he said.
"Unless the economy and the labor market suddenly change
direction, we continue to expect the first policy tightening to
take place in November this year," Shaw said.
Inflation data out on Tuesday showed faster growth in consumer
prices than expected, raising calls for BOE Governor Mark Carney
and fellow bank officials to tighten policy. Read: Get ready for a
November rate hike--U.K. inflation calls for BOE action
U.K.'s FTSE 100 index closed 1.1% higher at 6,784.67. Meanwhile,
the pound (GBPUSD) retreated, trading at $1.713, down from $1.715
ahead of the labor-market report. Sterling rallied on Tuesday after
the inflation data spurred rate-hike speculations.
Stock movers
Among London stocks on the move, shares of British Land Co. PLC
gained 1.8% after the real-estate investor reported a "strong
performance" in the first quarter amid solid demand for retail and
commercial space.
London Stock Exchange Group PLC put on 1.6% after the exchange
operator said first-quarter revenue jumped 20%, lifted by the
recent boom in initial public offerings.
Royal Mail PLC dropped 1.9% after getting involved in a French
antitrust probe.
Elsewhere, southern European banks rallied after fears about the
future for Banco Espírito Santo SA were calmed by comments that
shareholders stand ready to participate in a capital increase. BES
surged 20%, breaking a seven-day losing streak that was spurred by
jitters last week when its parent Espirito Santo International
(ESI) missed a coupon payment.
In the same vein, Portugal Telecom SGPS on Wednesday confirmed
it didn't receive a EUR847 million debt payment from a troubled
unit of ESI and said the terms of its merger with Brazil's Oi SA
have been revised as a consequence. Portugal Telecom shares,
however, added 3.3%.
Portugal's PSI 20 index jumped 3.1% to 6,299.50.
France's CAC 40 index advanced 1.5% to 4,369.06, and Germany's
DAX 30 index put on 1.4% to 9,859.27.
Software AG shaved off 2.7% to 19.45 euros ($26.37) after Kepler
Cheuvreux kept a reduce rating on the business-software company and
lowered the price target to EUR20 from EUR27. The action comes
after Software AG on Tuesday cut its 2014 outlook for sales growth
at its biggest business.
Tele2 AB erased 1.6% after the Swedish telecom operator reported
a decline in revenue.
Shares of Alstom SA climbed 2.2% after Exane BNP Paribas lifted
the industrial conglomerate to outperform from neutral, according
to Dow Jones Newswires.
More must-reads from MarketWatch:
What you can learn from the Comcast call from hell
Yahoo's Mayer has nothing to celebrate
Decoding Yellen: Sooner rate hike means March at the
earliest
Subscribe to WSJ: http://online.wsj.com?mod=djnwires