By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets posted
broad-based gains on Thursday, breaking a three-day losing streak,
after data showed a pickup in manufacturing activity in both the
euro zone and China.
The Stoxx Europe 600 index rallied 1% to close at 303.55,
marking the best one-day percentage performance in three weeks.
On Wednesday, the index closed at the lowest level since late
July, as investors increasingly worried that the U.S. Federal
Reserve would scale back its asset purchases as soon as September
Minutes from the Fed's latest meeting, released later the same day
after the European market close, provided few hints in terms of a
timeline for the tapering process.
"There's still an element of investors' digesting the minutes
from the Fed yesterday. Added to that, we had some positive
economic data from China and Europe, which have added to some
positive sentiment," said Keith Bowman, equity analyst at
Hargreaves Lansdown.
"It's difficult to say if this rally will continue. Investors
are still trying to make sense of when we'll see tapering and what
it will mean for the stock markets going forward. We're also seeing
that play into emerging markets because of fears it would have some
impact there," he added.
Among notable movers in the pan-European index, shares of Royal
Ahold NV jumped 5.2% after the Dutch supermarket chain reported a
3% rise in second-quarter sales at constant exchange rates.
Shares of IMI PLC climbed 5.8% after the engineering group
reported an 8% rise in first-half profit and raised dividends
8%.
Banks were also higher, with shares of Commerzbank AG 5.7%
higher in Frankfurt, UniCredit SpA up 3.7% in Milan and HSBC
Holdings (HBC) rising 1.5% in London.
More good news from Europe
More broadly, the pan-European index was boosted by encouraging
macroeconomic data from the euro zone, which showed business
activity in the region expanded at the fastest pace in more than
two years in August. The Markit preliminary composite purchasing
managers' index rose to a 26-month high of 51.7, up from 50.5 in
July. A level above 50 indicates expansion.
"So far, the third quarter is shaping up to be the best that the
euro area has seen in terms of business growth since the spring of
2011. The economic picture from the surveys is therefore coming
into line with policy makers' expectations of a modest, yet still
fragile, return to growth," said Chris Williamson, chief economist
at Markit, in the data release.
On a country-specific basis, data showed Germany's composite PMI
rose to a seven-month high, driven by the fastest rise in
manufacturing production for over two years. The readings in France
were more mixed, with the composite PMI dropping to a two-month low
of 47.9, while the manufacturing reading remained at 49.7.
Germany's DAX 30 index jumped 1.4% to 8,397.89, while France's
CAC 40 index gained 1.1% to 4,059.12.
Investors also welcomed upbeat data from China. The flash
reading of the country's manufacturing PMI, compiled by HSBC and
Markit, showed a rebound to a four-month high of 50.1 in August,
from a final reading of 47.7 in July, an 11-month low.
"The gap between the official and the HSBC readings that had
puzzled the market for four months was basically closed by this
surprising rebound. All major activity data are now moving in the
same direction, indicating a much-strengthened growth momentum in
Q3," said Yao Wei, China economist at Société Générale, in a
note.
Miners, which tend to rise on growth indications from China,
climbed after the data. Shares of heavyweights Rio Tinto PLC (RIO)
and BHP Billiton PLC (BHP) both added 1.9% in London.
The U.K.'s FTSE 100 index closed 0.9% higher at 6,446.87.
In the U.S., stocks traded higher, after closing sharply lower
on Wednesday on the back of the release of minutes from the Federal
Reserve's July meeting.
"The minutes gave a slightly more cautious take on the outlook,
which could give the Fed more wiggle room to delay the start of
tapering from the September date consensus now expects," said
Robert Wood, chief U.K. economist at Berenberg in London, in a
note.
Data out of the U.S. on Thursday showed jobless claims rose by
13,000 to 336,000 last week, but remained near a postrecession
low.
Additionally, the Conference Board's index of economic
indicators rose 0.6% in July to 96.0, slightly above estimates.
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