European stocks higher as sentiment slightly recovers; DAX up 0.69%

Investing.com - European stock markets turned higher on Tuesday, supported by an unexpected improvement in German economic sentiment and after a well-received Spanish bond auction.

During European afternoon trade, the EURO STOXX 50 rose 0.44%, France’s CAC 40 advanced 0.20%, while Germany’s DAX 30 climbed 0.69%.

The ZEW Centre for Economic Research said that its index of German economic sentiment rose for the first time in ten months in December, edging up to minus 53.8 from last month’s three-year low of minus 55.2.

 Analysts had expected the index to decline to minus 55.8 in December.

Meanwhile, Spain sold EUR4.94 billion of 12- month and 18-month bills, compared with the maximum target of EUR4.25 billion euros the Treasury set for the sale.

But investors remained cautious as the yield on Italian 10-year government bonds climbed above the critical 7% threshold, amid concerns over potential euro zone rating downgrades.

Financial stocks remained broadly lower after the industry was downgraded to “neutral” from “bullish” at Normura Holdings. BNP Paribas plunged 3.42% and Societe Generale plummeted 2.83%, while German lender Deutsche Bank declined 0.25%.

Meanwhile, Commerzbank tumbled 1.31% after Germany’s Finance Ministry denied reports that it is holding talks with the bank to offer state assistance.

On the upside, French group Lagardere surged 4.43% after Deutsche Bank upgraded the publisher to “buy” from “hold.”

In London, FTSE 100 advanced 0.76%, led by gains in mining and copper stocks.
Copper producers Xstrata jumped 1.28% and Kazakhmys surged 3.07%, while mining giant Rio Tinto climbed 1.87%.

Meanwhile, U.K. lenders were mixed as shares in Lloyds Banking climbed 2.15% and the Royal Bank of Scotland rose 1.56%, while HSBC Holdings and Barclays retreated 0.04% and 0.20% respectively.

Elsewhere, Whitbread posted its biggest drop since August, plummeting 4.63% after the owner of Premier Inn and Costa Coffee shops reported a slowdown in revenue growth as the U.K. hotel market weakened.

In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a rise of 0.44%, S&P 500 futures signaled a 0.60% rise, while the Nasdaq 100 futures indicated a 0.56% gain.

Later in the day, the Fed was to announce its federal funds rate, while the U.S. was also to release official data on retail sales.