European shares extend gains on positive US data

Eurostoxx 50: 2,212.44 (+35.80) Frankfurt DAX: 5,639.58 (+61.16) Paris CAC: 3,027.65 (+32.03)

EUROPEAN STOCKS climbed for the fourth time in five days yesterday, as US employment and growth data exceeded forecasts and German lawmakers backed an enhanced euro-region rescue fund.

The Stoxx Europe 600 Index climbed 0.7 per cent in London after swinging between gains and losses at least 15 times.

“US data is providing a positive surprise to support a bounce in stocks,” said Daniel Weston, a portfolio adviser at Schroeder Equities GmbH in Munich.

“Europe is showing glimmers of hope for political certainty,” he said.

A report yesterday showed a revised 1.3 per cent increase in US gross domestic product in the second quarter, compared with a 1 per cent gain previously calculated.

Germany’s lower house of parliament approved the expansion of the European Financial Stability Facility’s firepower yesterday. Lawmakers in the Bundestag voted 523 in favour of the measure, while 85 voted against; three abstained. The legislation, which raises Germany’s guarantees to €211 billion from €123 billion, is set to be debated and put to a non- binding vote in the upper house today.

BNP Paribas, France’s biggest bank, rallied 3.4 per cent to €30.67 and UBS, Switzerland’s largest bank, advanced 5.1 per cent to 11.57 francs. Banking shares were the second-best performers in the Stoxx 600 yesterday, climbing 2.5 per cent.

HM advanced 6.8 per cent to 209.20 kronor.

International Consolidated Airlines, the owner of British Airways and Iberia, rose 3.8 per cent to 159.7p as JPMorgan Chase rated the shares “overweight” in new coverage.

Swatch slumped 5.8 per cent to 325 Swiss francs. Burberry declined 8.3 per cent to 1,201p.

Mining companies retreated with base metals. Fresnillo, the world’s largest primary silver producer, slid 4.7 per cent to 1,511p.

Rio Tinto, the second-biggest mining company, lost 3.1 per cent to 2,962p. Balda sank 5.6 per cent to €5.52 after Handelsblatt said the German maker of plastic components fraudulently obtained subsidies of several million euro from Chinese authorities, citing a former Balda manager. – (Bloomberg)