European stocks rise on strong Spanish data; Dax up 0.16%

Investing.com - European stocks were higher on Tuesday, after the release of strong Spanish service sector activity data, although political uncertainty in the euro zone continued to weigh.

During European morning trade, the EURO STOXX 50 rose 0.37%, France’s CAC 40 advanced 0.43%, while Germany’s DAX 30 added 0.16%.

Markit research group said that Spain's service sector purchasing managers' index rose to 47 in January from a reading of 44.3 the previous month, compared to expectations for a fall to 44.1.

Meanwhile, fresh political uncertainty in Spain and Italy revived fears over the debt crisis in the region, pushing peripheral borrowing costs higher.

Spanish Prime Minister Mariano Rajoy faced calls to step down following allegations of corruption against him and senior officials in the ruling Popular Party, while uncertainty over the outcome of upcoming Italian elections mounted as former Prime Minister Silvio Berlusconi gained ground in opinion polls.

Financial stocks were broadly higher, as shares in French lenders BNP Paribas and Societe Generale advanced 0.16% and 0.84%, while Germany's Deutsche Bank rose 0.35%.

Peripheral lenders added to gains, with Italian banks Intesa Sanpaolo and Unicredit jumping 2.12% and 2.72%, while Spain's BBVA and Banco Santander rallied 0.86% and 1.22% respectively.

Elsewhere, Munich Re surged 2.72% after the world’s biggest reinsurer said it will increase its dividend for 2012.

On the downside, Royal KPN NV dove 21.46% after announcing it will sell EUR4 billion of shares.

In London, FTSE 100 climbed 0.54%, as markets eyed the release of U.K. service sector activity data later in the day.

Oil and gas major Anglo American trended higher, with shares climbing 0.74%, while rival company BP jumped 1.64%.

Meanwhile, mining stocks were on the downside. Shares in BHP Billiton slipped 0.12% and Eurasian Natural Resources dropped 0.76%, while copper producer Xstrata declined 0.47%.

In the financial sector, stocks were mixed, as shares in Lloyds Banking added 0.20% and the Royal Bank of Scotland advanced 0.81%, while HSBC Holdings and Barclays fell 0.07% and 0.44% respectively.

In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a 0.15% rise, S&P 500 futures signaled a 0.24% increase, while the Nasdaq 100 futures indicated a 0.15% gain.

Also Tuesday, Markit said that Italy's service sector PMI fell to 43.9 in January from 45.6 the previous month, disappointing expectations for a rise to 45.8.

Later in the day, the U.S. Institute of Supply Management was to publish a report on service sector activity.