Easing hopes lift euro zone stocks into close; DAX up 0.71%
Published Aug 16, 2012 12:44PM ET
At the close of European trade, the EURO STOXX 50 soared 1.08%, France’s CAC 40 added 0.91%, while Germany’s DAX 30 climbed 0.71%.
Launching easing hopes, manufacturing activity in the Philadelphia-region contracted for the fourth consecutive month in August, underlining concerns over the strength of the U.S. economy, official data showed on Thursday.
In a report, the Federal Reserve Bank of Philadelphia said that its manufacturing index improved by 5.8 points to minus 7.1 in August from July’s reading of minus 12.9.
Analysts had expected the index to improve by 7.9 points to a reading of minus 5.0 in August.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
Indexes for new orders and shipments remained negative. The new orders index improved one point, while the shipments index fell 3 points.
Labor market conditions at the reporting firms deteriorated slightly this month.
Expectations for additional stimulus measures by the U.S. central bank eased after official data on Wednesday showed that industrial production in the U.S. rose by 0.6% in, beating expectations for a 0.5% increase and following a 0.1% rise the previous month.
The data came one day after a report showed that U.S. retail sales snapped four successive months of declines in July, jumping 0.8%, outstripping expectations for a 0.3% increase.
But investors remained cautious after data on Wednesday showed that a gauge of manufacturing activity in New York fell into contraction territory in August for the first time since October 2011.
Financial stocks turned broadly higher, as shares in German lenders Deutsche Bank and Commerzbank climbed 0.56% and 1.01% respectively. BNP Paribas remained lower on the other hand, edging down 0.12%, amid reports it is planning on selling its retail businesses in Egypt.
Peripheral lenders also contributed to gains, with Italian banks outperforming their counterparts after closing for a national holiday on Wednesday. Intesa Sanpaolo and Unicredit surged 3.51% and 2.49% respectively, while Spain’s Banco Santander and BBVA advanced 1.17% and 0.52%.
On the upside, struggling phone maker Nokia saw shares surge 3.37% after announcing a joint media event will be held with Microsoft in September, boosting expectations that it will show off its Windows smartphone upgrade before rival Apple presents its next iPhone – expected to be announced exactly a week later.
The news came after ratings agency Standard and Poor's on Wednesday downgraded Nokia's long-term corporate credit rating further into junk status, amid concerns over the company's deteriorating profitability.
In London, FTSE 100 added 0.03%, as data showed that retail sales in the U.K. rose more-than-expected in July.
Admiral Group remained one of the session’s top losers, with shares plummeting 1.95%, a day after announcing that IT outsourcing business SilverBug merged with three of its divisions - Admiral IT, Admiral Network Infrastructure and Admiral Education Solutions.
Meanwhile, mining giants Rio Tinto and BHP Billiton pushed higher, as shares rose 0.86% and 1.29%. Copper producers Xstrata and Kazakhmys also added to gains, advancing 0.29% and 2.45% respectively, while rival company Vedanta Resources rallied 2.15%.
In the financial sector, stocks turned broadly higher. Shares in Lloyds Banking soared 3.26% and the Royal Bank of Scotland jumped 1.96%, while Barclays and HSBC Holdings rose 0.76% and 0.23% respectively.
Separately, the Royal Bank of Scotland, Barclays and HSBC Holdings were reportedly among the seven world banks subpoenaed this week in the U.S. investigation into alleged manipulation of Libor.
In the U.S., equity markets are trading higher with the Dow up 0.48%, the S&P 500 higher by 0.57% and the tech heavy Nasdaq pushing ahead by 0.81%.
Investors are awaiting the U.S. Michigan consumer sentiment numbers and the Canadian CPI on Friday.
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