European stocks trim gains, remain supported; DAX up 1.59%

Investing.com - European stock markets trimmed gains on Monday, but remained strongly supported as the announcement of a European bailout for Spain eased concerns over the handling of the country’s financial crisis and boosted investor confidence.

During European afternoon trade, the EURO STOXX 50 surged 1.47%, France’s CAC 40 jumped 1.23%, while Germany’s DAX 30 rallied 1.59%.

European stocks were boosted after the European Union agreed to lend Spain as much as EUR100 billion that Madrid will use to recapitalize its banks.

But investors remained cautious as details of the Spanish bailout agreement remained unclear, with the exact amount Spain is to receive still to be decided, after the results of independent banking audits are published later this month.

Meanwhile, uncertainty over the outcome of a Greek general election on June 17, which could determine the course of the country’s future in the euro zone, also weighed.

Markets shrugged off official data showing that Chinese inflation, industrial output and retail sales disappointed expectations in May, after unexpectedly strong import data eased concerns over a ‘hard landing’ in the world’s second largest economy.

Spanish lenders continued to lead gains, as shares in BBVA rallied 5.43% and Banco Santander jumped 4.61%, while Bankinter surged 6.17%.

France’s biggest lenders, Societe Generale and BNP Paribas, were also sharply higher, climbing 1.77% and 1.48% respectively, while Germany’s Deutsche Bank and Commerzbank rose 2% and 1.95%.

Spain’s number one phone company Telefonica advanced 5.37%, after it agreed to sell 1.07 billion shares in China Unicom to China United Network Communications Group. Pending regulatory approval, the deal is expected to close before July 31.

Meanwhile, auto makers also contributed to gains. Shares in Volkswagen soared 4.02%, while the world’s biggest maker of luxury cars, BMW, gained 2.23% after reporting a 6.4% increase in group sales last month and saying it’s on the way to achieve an all-time high for 2012.

In London, FTSE 100 added 0.57%, as U.K. lenders tracked their European counterparts sharply higher.

Shares in Lloyds Banking advanced 3.18% and Barclays climbed 1.70%, while the Royal Bank of Scotland and HSBC Holdings rose 1.30% and 1.08% respectively.

Mining giants Rio Tinto and Bhp Billiton also held gains, rallying 1.83% and 1.69% on China’s rising imports, while Vedanta Resources rallied 6.57%.

Copper producers Xstrata and Kazakhmys climbed 1.67% and 1.13%, while oil and gas major BP saw shares add 2.29%.

Elsewhere, British Sky Broadcasting Group climbed 1.36% after the New York Times reported Comcast Corp. may be mulling a bid for the U.K. company, although Comcast later refuted the rumors.

In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to rise of 0.57%, S&P 500 futures signaled a 0.53% gain, while the Nasdaq 100 futures indicated a 0.55% increase.

Also Monday, official data showed that industrial production in France rose far more-than-expected April, jumping 1.5% after a 1% decline the previous month. Analysts had expected industrial production to rise 0.1% in April.