European stocks jump despite weak economic data

European stock markets advanced solidly Tuesday as traders brushed aside weaker-than-expected economic data out of Germany and China to focus on positive earnings news, analysts said.

London's FTSE 100 index of leading companies rose 0.96 percent to stand at 6,340.20 points approaching midday.

Frankfurt's DAX 30 won 0.78 percent to 7,535.76 points and in Paris the CAC 40 jumped 1.83 percent to 3,719.08.

In foreign exchange deals, the euro fell to $1.2986 from $1.3059 late on Monday in New York.

On the London Bullion Market, gold dropped to $1,417.29 an ounce from $1,424.50.

"Traders (in London) have shrugged off weaker-than-expected Chinese manufacturing figures and are focusing on strong trading updates from ARM and Associated British Foods," said David Madden, market analyst at IG traders.

"Ordinarily a hint of China slowing down would prompt traders to dump mining stocks, but the lower-than-estimated (Chinese) GDP figures last week took the sting out of today's announcement."

Shares in British chipmaker ARM won eight percent after the group revealed a 28-percent rise in first-quarter revenue.

Private sector business activity meanwhile remained weak across the eurozone in April, underscoring a gloomy medium-term outlook for the 17-state economy, a widely-watched survey showed on Tuesday.

The Markit Eurozone Composite Purchasing Managers Index (PMI) registered 46.5 points, the same reading as March and well below the boom-and-bust line of 50 points indicating growth or recession.

It was the 19th time in 20 months that the survey of thousands of eurozone companies signalled a contraction in the single currency area's economy.

Both manufacturing and services sectors posted weak readings, with the powerhouse German economy seeing its first drop since November, while the French downturn eased, the researchers said.

"Markets seem to have shrugged off the batch of disappointing data -- a dip in Chinese flash PMI pointing to a slowdown in the world's biggest trading nation did not resurrect concerns over global recovery, at least for now," said Gekko Markets trader Anita Paluch.

"Also the poor German PMI numbers showing that the German economy has contracted the eurozone flu did not discourage the Dax from advancing fat into green territory, led by Lufthansa after it resumed near normal flight schedule."

Shares in German airline Lufthansa grew 2.0 percent to 14.4 euros, a day after the company cancelled most of its domestic, European and long-haul flights as thousands of staff walked out in pursuit of higher pay.

"Later today Apple will be on investors' radar, who will be bracing for the worst -- a drop in profit for the first time in 10 years," said Paluch.

In Asia, shares in Hong Kong and Shanghai fell on Tuesday after data showed manufacturing activity in China slowed in April, adding to concerns about the state of the world's number two economy.

Its initial PMI for the month came in at 50.5, from a final 51.6 in March.

On Wall Street, US stocks closed higher Monday amid mixed earnings reports, bouncing back after last week's losses.

Monday's gains came despite a 0.6-percent drop in US existing-home sales from February to March.