European stocks extend gains on ECB rate cut talk

Europe's main stock market extended gains Wednesday on growing expectations of an interest rate cut by the ECB following poor German economic data, analysts said.

London's FTSE 100 index of leading companies edged up 0.02 percent to stand at 6,407.38 points in late morning deals, while Frankfurt's DAX 30 climbed 0.47 percent to 7,694.75 points and in Paris the CAC 40 rose 0.44 percent to 3,799.74.

In foreign exchange trade, the euro rose to $1.3003 from $1.2997 late on Tuesday in New York. The dollar neared closer to the 100 yen level, buying 99.56 yen compared to 99.48 on Tuesday.

On the London Bullion Market, gold climbed to $1,424.50 an ounce from $1,408 Tuesday.

"Following yesterday's weak PMI (private sector economic) data we have had a poor German IFO survey, further reinforcing market speculation of a rate cut from the ECB," noted CMC Markets trader Nick Dale-Lace.

German business confidence took a tumble this month, according to data Wednesday, supporting speculation of a possible interest rate cut by the European Central Bank, analysts said.

The Ifo economic institute's closely watched business climate index fell to 104.4 points in April from 106.7 points in March.

That was a bigger drop than expected: analysts had been pencilling in only a very slight decrease this month to 106.2 points

Gekko Markets trader Anita Paluch said that "bad numbers may be conducive enough for ECB to take some action and provide more liquidity in the light of those economic headwinds."

European stocks markets had closed sharply higher on Tuesday, with Paris up 3.5 percent, on growing rate cut expectations from the ECB.

Market watchers were on Wednesday also poring over a batch of mixed company earnings data. Volkswagen shares jumped 3.30 percent to 15.18 euros, even though Europe's biggest carmaker said its net profit skidded sharply lower in the first three months of the current year as a result of the "difficult market environment."

Traders said the share price was higher owing to the company sticking to its full-year profits target.

In London, Barclays dropped 1.73 percent to 298.21 pence, erasing earlier gains, as the British bank said it had returned a net profit in the first quarter after suffering a loss after tax one year earlier.

France Telecom meanwhile advanced 2.13 percent to 7.96 euros after the company said it was banking on high-speed Internet services to boost sales after reporting a substantial drop in first quarter earnings owing to stiff competition.

Asian stock markets rose on bargain-buying Wednesday and following a rally overnight on Wall Street according to traders, with Tokyo enjoying a healthy bump as the dollar tries to break through the 100 yen barrier for the first time in four years.

Investors took their lead from New York, which jumped on the back of upbeat earnings results from some corporate giants, while they seemed to brush off more weak manufacturing figures from China and Europe.

Tokyo closed up 2.32 percent, Seoul won 0.87 percent and Sydney climbed 1.72 percent.