Euro shares close higher on U.K. data, court ruling hopes; DAX up 0.79%

Investing.com - European stocks rose sharply on Tuesday, erasing earlier losses, as U.K manufacturing topping estimates combined with Spain’s assistance package to lift equity sentiment prior to the German court ruling on the European Union’s permanent bailout fund.

At the close of European trade, the EURO STOXX 50 added 0.63%, France’s CAC 40 climbed 0.59%, while Germany’s DAX 30 advanced 0.79%.
U.K. factory output increased 1.2%  and Italian industrial production gained 0.08%, both beating estimates and adding to the equity bullish sentiment on the session.

Traders closely watched talks between EU finance ministers, after their euro zone counterparts agreed on Monday to make EUR30 billion in aid available to assist Spain’s struggling banking sector by the end of the month, while also supporting plans to extend Spain’s deficit target deadline by one year to 2014.

They made no apparent progress, however, on activating the bloc's rescue funds to intervene in bond markets and bring down Spain and Italy’s spiraling borrowing costs.

Spain’s 10-year government bonds eased to 6.9% earlier, moving below the critical 7% threshold which is widely seen as unsustainable in the long term.

However, stocks remained nervous as Germany's top court was due to decide whether the EU's permanent bailout fund is compatible with national law, potentially leading to deeper fiscal integration within the region.

Financial stocks turned broadly higher, led by French lenders BNP Paribas and Societe Generale, up 2.57% and 2.46%, and followed by Germany’s Deutsche Bank and Commerzbank, with shares surging 0.96% and 2.72% respectively.

Peripheral lenders were also sharply higher following Monday’s agreement. Spanish lenders BBVA and Banco Santander advanced 0.59% and 1.33%, while Italy’s Intesa Sanpaolo and Unicredit rallied 0.97% and 2.19%.

Dutch ASML Holding skyrocketed 8.89% after Intel agreed to invest as much as USD4.1 billion in the maker of semiconductor equipment.

Meanwhile, Logitech International surged 4.12%, as the world’s biggest maker of computer mice announced that its board intends to ask shareholders to approve a one-time dividend, the first payment since 1996.

In London, FTSE 100 advanced 0.78%, after data showed that U.K. manufacturing production rose far more-than-expected in May, while the country’s trade deficit narrowed more-than-anticipated.

Mining stocks led gains, as shares in Vedanta Resources rallied 4.26% and Xstrata surged 3.16%, while Rio Tinto and BHP Billiton jumped 1.48% and 1.34% respectively.

Financial stocks extended gains, as shares in Barclays surged 2.36% and the Royal Bank of Scotland climbed 1.87%, while Lloyds Banking and HSBC Holdings advanced 1.72% and 0.76%.

Barclays Chairman Marcus Agius said earlier that the bank’s former CEO, Bob Diamond, will forgo deferred bonuses valued at as much as GBP20 million after politicians protested his role in the Libor- fixing scandal. 

Elsewhere, Marks & Spencer gained 2.83% as the retailer said its head of general merchandise Kate Bostock will step down after reporting the biggest decline in non-food revenue since 2008. 

In the U.S., equity markets traded mixes with the Dow up 0.15%, the S&P 500 down by 0.15% while the Nasdaq traded off by 0.37%.

In bearish news Tuesday, official data showed that French industrial production tumbled 1.9% in May, far more than expectations for a 0.9% fall and following a 1.4% rise the previous month.

Traders are anticipating the U.S. trade balance and the FOMC meeting minutes, as well as Australia’s unemployment rate and the Japanese interest rate decision on Wednesday.