By Nina Bains
European stocks edged higher Thursday, led by miners, after manufacturing data from the euro zone and China beat expectations; while German Bunds climbed and the euro was steady against the dollar ahead of the European Central Bank monetary policy decision.
Miners led the gains early in the European session, with the Stoxx 600 basic resources index rallying 1.2% after upbeat manufacturing data from China and the euro zone.
China’s official manufacturing purchasing managers’ index rose to 50.3 for July from 50.1 the previous month, surpassing the 49.8 economists’ forecast.
In addition, the HSBC index, which covers a wider range of smaller companies, came in at 47.7 for July, unchanged from the preliminary estimate.
Hong Kong’s Hang Seng Index rose 0.8% and China’s Shanghai Composite rallied added 1.8%.
Meanwhile, the euro zone’s manufacturing sector grew in July for the first time in two years.
Germany’s manufacturing growth was the fastest in a year-and-a-half while Italy’s manufacturing sector reported higher activity for the first time in two years.
The manufacturing purchasing managers’ index rose to 50.3 in July from 48.8 in June, higher than an earlier estimate of 50.1.
“The overall index shows some momentum in July after the depressed picture described since the start of the year,” said Annalisa Piazza, economist at Newedge.
“Today’s outcome represents the first above-50 reading since early 2012 and confirms that the euro-zone economy’s recession has come to an end.”
U.K. manufacturing data were equally upbeat, as the sector expanded at the fastest pace in over two years.
The monthly purchasing managers’ index rose to 54.6 in July, the highest level since March 2011 and exceeding economists’ expectations.
Sterling rose to a fresh high for the day against the dollar while gilts remained higher. Attention now turns to the Bank of England rate announcement.
German Bunds climbed, taking early strength from firmer U.S. Treasurys, after the Federal Reserve kept the central bank’s $85 billion-per-month bond-buying program on hold late Wednesday. However, the euro was steady against the dollar as investors awaited the European Central Bank rate decision later in the session.
The Fed said that the U.S. economy has expanded “at a modest pace,” during the first half of the year while also expressing concern about low inflation and higher mortgage rates.
“The market took a dovish interpretation of the FOMC statement, focusing on the disinflationary dialogue,” said Sue Trinh, senior currency strategist at RBC Capital Markets, referring to Wednesday’s meeting of the Federal Reserve Open Market Committee.
Corporate news in Europe was mixed but banks had a good showing.
Societe Generale SA shares rallied as second-quarter net profit more than doubled from a year ago, helped by its international retail business and stronger investment-banking revenue.
Lloyds Banking Group PLC shares soared after the bank posted strong first-half profits and reported it is making faster-than-expected progress on shoring up capital.
Shares in BAE Systems PLC gained after reported strong growth in big-ticket orders and after delivering guidance on double-digit growth for the full year.
On the downside, shares in Royal Dutch Shell PLC slumped after the oil and gas giant posted a 60% fall in profit for the second quarter.
Sanofi shares were also under pressure after the French drug maker reported weaker second-quarter earnings and lowered its earnings guidance for 2013.
Write to Nina Bains at nina.bains@dowjones.com
(END) Dow Jones Newswires
August 01, 2013 05:34 ET (09:34 GMT)
Copyright (c) 2013 Dow Jones & Company, Inc.
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