Correction: European Markets at Close Report I MarketWatch -April10, 2013-.: Strong China import demand boosts Europe stocks

By Sara Sjolin, MarketWatch 
 
LONDON (MarketWatch) European stock markets rallied to close at the highest level in a week on Wednesday, boosted by data showing Chinese demand for imports surged in March as well as comments on extending bailout programs for Ireland and Portugal. 

The broad-based gains further tracked solid performances in the U.S., where the S&P 500 index SPX +1.22%  climbed to an intraday record. 

The Stoxx Europe 600 index XX:SXXP +1.78% rallied 1.8% to close at 293.19, the best daily performance since early March.

A rush to sell gold in Japan
The weak yen has triggered a gold rush, literally, in Japan as families sell items to take advantage of prices that have soared in yen terms. Michael Casey explains. Photo: Getty Images. 

“There has been some good export news from China, which offsets concerns about the global growth story from last week,” said Oliver Wallin, investment manager at Octopus Investments 

“But it is not the only driver. We’ve seen for quite a while that traders buy on the dips and wait for pullbacks in the market to join in. I suspect that last week offered that invitation and we had seen profit-taking for some time,” he added. 

Europe’s benchmark index posted its worst week since November last week, after weak U.S. 

nonfarm-payrolls data fueled worries over the country’s economic and labor market recovery. 

The downbeat data, however, eased concerns that the Fed in the near future would fade out its monthly asset purchases, as the central bank broadly use the labor market as a guidance of the duration of its easing program. Minutes from the Fed’s March meeting showed Wednesday that the policy-setting committee remains divided on when to end the bank’s asset purchases. 

The Fed said that one member wanted to slow the bond purchases immediately, while a few more favored slowing the purchases at midyear, with the program ending later in 2013. The minutes were released five hours ahead of schedule after the central bank discovered some copies had been inadvertently sent to staffers and trade groups on Tuesday.

U.S. stocks were higher on Wall Street.

China trade data

European investors further looked to China, where the country posted an unexpected trade deficit. Imports surged 14.1% from a year earlier, beating estimates of 6.1% growth and underlining that domestic demand in the world’s second-largest economy is improving. Exports rose 10%, below expectations of a 12% rise. 


STR/AFP/GettyImages Enlarge Image
China imports surged more than expected in March data show on Wednesday.
“This could dispel concerns over weak domestic demand. The near-term economic outlook is further supported by moderating inflation as witnessed by yesterday’s inflation report, which has eased pressure on [People’s Bank of China] to tighten policy,” analysts at Danske Bank said in a note. 

Resource shares climbed after the data, as China is a major user of natural resources. Shares of Eurasian Natural Resources Corp. UK:ENRC +3.81%  gained 3.8% in London, while oil group Total SA FR:FP +0.94% TOT +0.06% rose 0.9% in Paris. 

European banks also benefited from the positive sentiment and were further lifted by comments from the troika of international lenders about extending Portugal and Ireland’s bailout programs by seven years, according to Bloomberg

The recommendation came ahead of a meeting of euro-zone finance ministers in Dublin on Friday, where measures to help the two countries return to the financial markets for financing are expected to be discussed. 

Portugal’s PSI 10 index PT:PSI20 +4.35%  jumped 4.4% to 5,961.57, while Ireland’s ISEQ 20 index XX:IECP +1.84%  closed 1.8% higher at 631.84. 

Shares of Banco Comercial Português SA PT:BCP +12.79%  soared 13% and Banco Espirito Santo SA PT:BES +10.81%  surged 11% in Lisbon. 

Shares of Banco Popolare SC IT:BP +9.68%  climbed 9.7% in Milan, Société Générale SA FR:GLE +6.12%  jumped 6.1% in Paris and Deutsche Bank AG DE:DBK +3.79%   DB +3.23%  gained 4.2% in Frankfurt. 

Among other country-specific indexes in Europe, Germany’s DAX 30 index DX:DAX +2.27% added 2.3% to 7,810.63, while France’s CAC 40 index FR:PX1 +1.99% gained 2% to 3,743.71. 

Shares of utility firm E.ON SE DE:EOAN +2.81%  rose 3.8% in Germany, after Morgan Stanley removed the company from its “bottom picks” and upgraded it to equal-weight from underweight, citing improved risk-reward outlook. 

Deutsche Lufthansa AG DE:LHA +3.60%  picked up 3.6%. The airline said its passenger load factor rose 2.8 percentage points to 79.5% in March, while passenger volume slipped 1.2%. 

The U.K.’s FTSE 100 index UK:UKX +1.17% closed 1.2% higher at 6,387.37. Shares of heavyweight HSBC Holdings PLC UK:HSBA +1.04%   HBC +0.91%   HK:5 +1.24%  rose 1%.
Shares of low-cost airline EasyJet PLC UK:EZJ +6.65% gained 6.7% after Citigroup lifted the firm to buy from neutral, saying free-cash-flow generation bodes well for dividend growth and possible more special dividends. 

Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.



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