Climbing the wall of worry, euro shares surge into close; DAX up 1.06%

Investing.com - European stocks closed higher, climbing the wall of worry,  Thursday despite Standard & Poor’s downgrading Spanish debt and increased global growth worries

At the close of  European trade, the EURO STOXX 50  fell 1.24%, France’s CAC 40 advanced 1.42%, while Germany’s DAX 30 climbed 1.06%. 

S&P cut its rating on Spain to BBB-minus from BBB-plus with a negative outlook late Wednesday, citing "mounting risks to Spain’s public finances."

The ratings agency also warned that the capacity of Spanish political institutions to deal with the challenges presented by the current fiscal and economic crisis is declining. 

Sentiment found some support however after International Monetary Fund head Christine Lagarde earlier said that struggling euro zone members such as Greece and Spain should be given more time to cut their budget deficits. 

Financial stocks remained broadly higher, as shares in German lenders Deutsche Bank and Commerzbank jumped 1.25% and 0.99%, while France's BNP Paribas and Societe Generale climbed 0.69% and 1.76%. 

Italian banks added to gains, with shares in Unicredit and Intesa Sanpaolo rallying 1.19% and 1.21%, while Spanish lenders underperformed on the other hand. BBVA saw shares 0.71% and Banco Santander fell 0.21%. 

Elsewhere, retailers remained sharply higher, as Carrefour surged 3.63% after posting a small rise in third-quarter revenue, while luxury goods company LVMH rallied 3.95%. 

In London, FTSE 100 advanced 0.92%, boosted by sharp gains in financial stocks. 

Shares in HSBC Holdings climbed 0.72% and the Royal Bank of Scotland jumped 1.03%, while Lloyds Banking rallied 1.35% and Barclays surged 2.82%. 

Mining giants Rio Tinto and BHP Billiton saw shares advance 1.35% and 1%, while copper producers Xstrata and Kazakhmys rallied 1% and 2.63%. 

Retailers were also on the upside, as Burberry's soared 11.96%, extending earlier gains, after saying that revenue in the first half of the year increased 6% from last year. Tesco added 0.67%. 

In the U.S., equity markets followed higher with the Dow Jones up 0.22%, the broad based S&P 500 higher by 0.33% and the tech heavy Nasdaq ahead by 0.29%.

Investors are awaiting the Federal budget balance and Michigan consumer sentiment, as well as the core PPI from the United States on Friday.