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European stocks rise on China data

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(Globalpost/GlobalPost)

European stock markets rose on Thursday, mirroring the pattern in Asia after China posted upbeat trade figures that bolstered the outlook for the world's second-biggest economy, traders said.

London's FTSE 100 index rose 0.31 percent to stand at 6,531.08 points around midday in the British capital.

Frankfurt's DAX 30 climbed 0.34 percent to 8,288.96 points and the CAC 40 in Paris advanced 0.28 percent to 4,049.69.

"The main reason for the bright start in Europe has been the significant improvement in the Chinese trade data in July," said Craig Erlam, market analyst at Alpari trading group.

"One company that isn't overly confident about a Chinese recovery later this year is Rio Tinto," Erlam added after the mining giant reported a 71-percent slump in first-half net profit.

"While the company does not expect a hard landing, it did give a pretty gloomy outlook for the Chinese economy which, along with low commodity prices, it expects to weigh on profits in the second half of the year."

Rio Tinto shares nevertheless managed a gain of 1.0 percent to 2,984.5 pence as earnngs were better than the market had expected, traders said.

Several European companies, in reporting results halfway through the year, have mentioned evidence from their activities that business in China is slowing down.

China's imports and exports showed an unexpected jump in July, government data showed on Thursday in a positive sign for the Chinese economy, the world's second-biggest after the US economy, after persistent weakness raised concerns over growth.

The euro gained to $1.3350 from $1.3334 late in New York on Wednesday. The dollar slipped to 96.34 yen from 96.39 yen.

Comments from Federal Reserve officials earlier this week have sparked jitters over a likely pullback of the US stimulus, weighing on the dollar.

The chiefs of the Federal Reserve's Chicago and Atlanta branches both said that the central bank could begin tapering its $85 billion a month quantitative easing programme in September, but stressed that economic growth needed to hold steady or improve.

Sterling meanwhile steadied against the European single currency on Thursday, a day the British currency hit a one-month high point. Sterling was at 86.11 pence to the euro from 86.78 on Wednesday, and was at $1.5502 from $1.5531.

The Bank of England announced a major policy shift on Wednesday, as new head Mark Carney provided clear guidance on when it can be expected to raise Britain's record-low interest rate.

In a statement, the BoE said that it "intends not to raise Bank Rate from its current level of 0.5 percent at least until... the unemployment rate has fallen to a threshold of seven percent" -- providing markets with so-called forward guidance as used by the US Federal Reserve.

"The consensus opinion is that with the pickup in the UK economy, a seven percent unemployment rate is easily achievable well before the dubious BoE projections suggest, so markets have actually brought forward their expectations of a rate hike, marked by the surge in the pound," said Capital Spreads trader Jonathan Sudaria.

On the London Bullion Market, the price of gold climbed to $1,289.67 an ounce from $1,282.50 on Wednesday.

Among other share price movements, Aviva surged 5.69 percent to 391.9 pence after the British insurer announced a return to profits in the first half as it continues with signficant restructuring of the group.

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http://www.globalpost.com/dispatch/news/afp/130808/european-stocks-rise-china-data