European shares rise on strong German economic data

European shares rose on Wednesday after the release of strong German economic data, although concerns over a possible rise in inflation and high equity valuations kept gains in check.

Travel stocks jumped close to one-year highs amid optimism that major countries will soon lift Covid-19 restrictions.

DUBLIN

The Iseq closed up about 1.4 per cent as the positive mood among investors was sustained over the session.

Glanbia provided the main local news, with the food group rising 2.2 per cent to €10.25 on the day it released its full-year earnings. The company reported a 20 per cent drop in profit after tax and said its performance nutrition unit was affected by Covid-19 restrictions, but pointed to a brighter outlook for 2021.

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Among other stocks, building materials group CRH added 2.1 per cent to €37.11, while Ryanair advanced 2 per cent to €16.99. Packaging company Smurfit Kappa rose 1.5 per cent to €40.30, while Dalata Hotel Group was 2.7 per cent higher at €4.24.

It was also a good day for the banks, with Bank of Ireland finishing 3.5 per cent higher at €3.53 and AIB closing up 2.2 per cent at €1.86.

Glenveagh Properties, Kerry Group and Ires Reit were among the few companies to end the day modestly in the red.

LONDON

Britain’s main stock index recouped early losses to end Wednesday higher, as gains in commodity-linked and banking stocks on investor optimism about a post-pandemic economic recovery outweighed losses in defensive sectors.

After falling as much as 0.8 per cent, the commodity-heavy FTSE 100 index closed up 0.5 per cent, with oil heavyweights BP and Royal Dutch Shell providing the biggest boost with gains of 5.4 per cent and 3.3 per cent respectively, while the mid-cap FTSE 250 added 1.2 per cent.

Mining stocks including Rio Tinto, Anglo American and BHP added between 0.7 per cent and 1.5 per cent, boosted by higher metal prices.

Barclays jumped 3.4 per cent, while other lenders rose as Bank of England governor Andrew Bailey said the UK would resist "very firmly" any EU attempts to force banks into shifting trillions of euros in derivatives clearing from London to the EU.

Metro Bank fell 9.9 per cent as it posted a much bigger annual loss, while consumer goods maker Reckitt Benckiser shed 1.5 per cent even as it capped 2020 with the strongest sales in its history.

EUROPE

The pan-European Stoxx 600 ended 0.5 per cent higher. Germany’s Dax adding 0.8 per cent as data showed bullish exports and solid construction activity helped Europe’s biggest economy to grow by more than expected in the fourth quarter. The French Cac 40 climbed 0.3 per cent.

Norwegian salmon farmer Bakkafrost was the biggest percentage loser on the Stoxx 600 for a second session, shedding 7 per cent after it posted a fourth-quarter loss due to the pandemic.

German sportswear company Puma dropped 2.1 per cent after saying it expects a heavy impact on its results from lockdowns through the end of the second quarter. Telecom Italia surged 9.2 per cent after it said profit and sales should stabilise this year.

US

Wall Street's main indexes gained ground in early trading as a selloff in technology-related stocks eased and a rotation into cyclical shares continued after Federal Reserve chairman Jerome Powell's comments soothed inflation worries.

The Nasdaq index regained footing by early afternoon after falling as much as 1.3 per cent, while the Dow Jones hit a record high.

Microsoft, Amazon.com, Facebook and Apple were down between 0.3 per cent and 1 per cent, while Netflix and Alphabet reversed earlier declines. Tesla gained 4.8 per cent after star investor Cathie Wood's Ark Invest fund bought a further $171 million worth of its shares in the wake of a sharp fall in its stock.

– Additional reporting: Reuters