European stocks gain, euro jumps on Italy bond auction

Europe's main stock markets rose on Thursday and the euro rallied above $1.31, as traders seized on news of a successful Italy bond auction and a strong drop in new US unemployment claims.

London's FTSE 100 index of leading companies rose 0.45 percent to close at 6,416.14 points, while in Frankfurt the DAX 30 climbed 0.78 percent to 7,871.63 points and in Paris the CAC 40 added 0.85 percent to 3,775.66 points.

Milan's FTSE Mib index meanwhile advanced 0.58 percent to 16,021 points, and Madrid's IBEX 35 gained 0.25 percent to 8,159.5 points.

In foreign exchange deals, the European single currency spiked as high as $1.3134 -- which was the highest point since March 8. It later stood at $1.3121, up from $1.3080 in New York late on Wednesday.

"Europe's markets have remained fairly buoyant today without really ripping up any trees as investors continue to sit in the cocoon of the various central bank liquidity blankets that are currently pushing US markets to new all-time highs and helping support weaker European markets," said CMC Markets UK analyst Michael Hewson.

ETX Capital trader Ishaq Siddiqi said "sentiment improved in European markets after Italy, a country gripped with a myriad of political, economic and social uncertainties, managed to sell bonds close to the top of its target range."

Italy's borrowing costs dipped in a bond auction that raised 7.17 billion euros ($9.38 billion) but fell just short of the maximum target amount, amid ongoing deadlock over a new government.

The Treasury sold 4.0 billion euros in three-year bonds, with the rate falling to 2.29 percent from 2.48 percent in a similar sale on March 13.

It also raised 1.67 billion euros in 15-year bonds -- below its maximum target amount of 2.0 billion euros -- with the borrowing rate at 4.68 percent against 4.9 percent in the auction last month.

"Demand was respectable, the auction went smoothly and though yields were slightly higher, investors have welcomed this robust appetite for Italian government paper," said Siddiqi.

He added: "It could be said investors are not pricing in the full effect of the political impasse in the country but continue to demonstrate their faith in policymakers and backstops such as the European Central Bank's bond buying programme."

Elsewhere on Thursday, gold prices eased to $1,565 per ounce on the London Bullion Market, from $1,577.25 late on Wednesday.

Early on European markets were boosted by another record performance on Wall Street on Wednesday, then news before markets opened Thursday that new US unemployment claims came in at the lowest in four months helped sustain the forward momentum.

Initial jobless claims, an indicator of the pace of layoffs and a keenly watched barometer of the health of the world's biggest economy, dropped 11 percent to a seasonally adjusted 346,000 in the week ending April 6, according to US Labor Department data.

In midday trading, the Dow Jones Industrial Average added 0.43 percent to 14,865.61 points, while the broad-based S&P 500 rose 0.36 percent to 1,593.44 points, and the tech-rich Nasdaq Composite Index edged up 0.09 percent to 3,300.08 points.

"The climate remains favourable even if there isn't much news," said Saxo Bank analyst Alexandre Baradez. "The market welcomed the better-than-expected weekly US unemployment claims numbers."

Back in London, British high street retailer Marks & Spencer saw its share price rally to the top of the FTSE 100 following upbeat earnings news.

Shares jumped 4.3 percent to close at 400.4 pence.

M&S announced that sales rose in the fourth quarter of its financial year, despite challenging conditions on the high street.

Group sales increased 3.1 percent in the 13 weeks to March 30, compared with the equivalent period of the company's previous fiscal year.

M&S added that British like-for-like sales, stripping out the impact of new floor space, climbed 0.6 percent in the same period. General merchandise sales sank 3.8 percent but food sales grew by 4.0 percent.

Earlier in Asia, markets mostly rose further after impressive US gains, while Tokyo hit fresh multi-year highs as the dollar approached the 100 yen mark.

While buying sentiment remains positive, dealers are keeping an eye on the stand-off on the Korean peninsula as the North, expected to fire a missile within the next few days, ratchets up its combative rhetoric.

Tokyo rose 1.96 percent, while Seoul added 0.73 percent and Sydney was 0.79 percent higher.

Hong Kong stocks advanced 0.30 percent, but Shanghai eased 0.30 percent lower to 2,219.55 points.