By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets rose for a second
straight day on Wednesday, fueled by better-than-expected German
consumer-confidence data.
The Stoxx Europe 600 index rallied 1.4% to 283.51, building on a
1.5% gain from Tuesday.
Last week, the index dropped to the lowest level in 2013 on
concerns the U.S. Federal Reserve will soon scale back its asset
purchases. The benchmark is on track for a 5.8% monthly loss, which
would mark the biggest one-month percentage decline since May
2012.
"From a technical perspective, given the large selling bias we
have encountered over the last few sessions, with valuations
remaining undemanding and U.S. data providing upside support, many
fresh buyers have again entered into new longs," said Atif Latif,
director of trading at Guardian Stockbrokers. He remains bullish on
equities.
Among notable movers in the pan-European index, shares of Direct
Line Insurance Group PLC climbed 4.3% after the U.K. firm announced
plans to cut costs by 130 million pounds ($200 million) and cut
about 2,000 jobs.
Spanish banks gained after Citigroup lifted the country's
banking sector to neutral. Bankinter SA , which was upgraded to buy
from sell, added 5.6%, and Banco Santander SA (SAN), which was
lifted to neutral from sell, gained 3.7%. The IBEX 35 index jumped
2.4% to 7,788.30.
Investors took inspiration from the U.S., where indexes rallied
Tuesday after data showed increases in durable-goods orders,
new-home sales and consumer confidence. The gains came despite the
looming prospect that the Federal Reserve may slow its bond
purchases if the U.S. economy improves further. Also read: Bill
Gross says Fed's tapering plan may be too hasty.
Data out on Wednesday, however, showed the U.S. economy in the
first quarter expanded by 1.8% instead of 2.4% as previously
estimated.
U.S. stock futures pointed to a higher open on Wall Street.
Most Asia markets also closed in positive territory. But China's
Shanghai Composite dropped 0.4% as interbank money market rates
remained unusually high, although down a bit from Tuesday.
German data improve
In Germany, the DAX 30 index climbed 1.5% to 7,926.60. Data
showed German consumers are optimistic about the summer, with the
GfK consumer-climate study forecasting a value of 6.8 points in
July, up from 6.5 points in June.
The report comes after data out earlier this month pointed to an
improvement in the euro-zone economy, with the manufacturing PMI
climbing to a 16-month high and German business confidence rising
for a second straight month. The brighter spots shouldn't, however,
weaken the case for a further rate cut from the European Central
Bank, when the bank meets next week, said Jack Kelly, investment
director for global bonds, at Standard Life Investments.
"The economy is not strong enough although the core data has
been resilient recently. The German Ifo was again a good number and
we've seen improvement in PMIs across Europe, but bank lending and
financial conditions, which are a lot of the things the ECB looks
at, are still very weak in the periphery and more work needs to be
done Europe. We haven't reached a turning point yet," he said.
"But I'm not banking on dramatic action [at the meeting next
week]. I think they'll adopt a wait-and-see approach, partly
because of the data and also because the choices are politically
difficult," he added.
France's CAC 40 index gained 1.8% to 3,717.14.
Shares of Unibail-Rodamco SE added 2.4% after UBS lifted the
property-investment firm to buy from neutral.
The U.K.'s FTSE 100 index rose 0.8% to 6,149.43.
Outside the major indexes, shares of Afren PLC jumped 7.3% and
Lekoil Ltd. surged 11% after the two firms said their Ogo well
offshore Nigeria discovered a significant light oil field.
Shares of Etablissementen Franz Colruyt NV jumped 7.5% in
Brussels after the discount food retailer late Tuesday reported a
6.2% rise in full-year operating profit.
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