European stocks edge higher on signs of recovery
A day after official data shows France and Germany emerging from recession, Europe’s main stock markets rose gently at open.
London – Europe's main stock markets rose gently at the start of trading on Friday after Tokyo hit a 10-month high and Wall Street rose overnight on increased signs of economic recovery, traders said.
In London the benchmark FTSE 100 index edged up 0.07 percent to 4,758.95 points, Frankfurt's DAX 30 climbed 0.03 percent to 5,402.99 points and in Paris the CAC 40 advanced 0.31 percent to 3,535.39.
European stock markets had advanced on Thursday, with London reaching a 10-month high, after data showed an end to recession in Germany and France and better than expected results for the eurozone.
On Thursday, London's benchmark FTSE 100 index rose 0.82 percent, the Paris CAC 40 gained 0.49 percent and the Frankfurt Dax closed up 0.95 percent.
Elsewhere in Europe, Amsterdam gained 0.37 percent, Geneva rose 0.41 percent, Milan jumped 1.30 percent and Madrid closed up 1.03 percent.
A day after the Federal Reserve said the recession-hit US economy was stabilising, official initial estimates showed Germany and France both achieved growth of 0.3 percent in the second quarter of 2009.
"We have come back to positive growth," said Finance Minister Christine Lagarde, welcoming what she described as "extremely surprising" figures.
But Lagarde warned the outlook for unemployment would "remain difficult," with her ministry saying private sector job losses could reach 591,000 in 2009.
Also on Thursday Brussels released second-quarter growth figures for the eurozone which showed an overall contraction of just 0.1 percent.
European Central Bank chief economist Juergen Stark said eurozone growth could return sooner than expected but warned against premature optimism.
"What we are seeing is based primarily on stimulus measures by the governments and the re-stocking of warehouses. Seen in that light, we cannot count on a durable return to a growth course," he said.
Marc Touati, a Paris-based analyst for Global Equities, also warned there could be more "negative" surprises ahead as the euro strengthens, interest rates creep back up and the impact of stimulus measures wears off.
"The really good news in this lies in the fact that, contrary to consensus forecasts going back a few weeks, a catastrophe along the lines of the 1930s Great Depression has been avoided," he said.
On Wall Street, the Dow Jones Industrial Average closed up 0.25 percent while the tech-heavy Nasdaq index gained 0.41 percent in the early afternoon.
Earlier in Asian trading, Tokyo's Nikkei-225 index closed up 0.79 percent, lifted by the overnight rally on Wall Street, traders said.
"The European markets are playing catch up to the US today after a good rally in the US markets last night following a positive message about the economy from the Fed," said Joshua Raymond, market strategist at City Index.
"The FTSE 100 has now reached a new 10-month-high and it seems this upward momentum has no end in sight just yet," he added.
US stocks had rallied on Wednesday, buoyed by comments from the Federal Reserve that the recession-mired US economy is stabilising as it announced a scaleback in its massive pump priming effort.
Some of the big winners on Thursday were mining stocks that were boosted by the better than expected European economic results.
Rio Tinto gained 4.22 percent to close at 2,409.5 pence and BHP Billiton rose 2.25 percent to 1,590 pence on the London Stock Exchange.
The share price of Prudential soared 10.7 percent to 529.5 pence after the biggest British insurer said it was hiking its half-year dividend by five percent thanks to stronger capital reserves.
Prudential added that its net losses more than doubled in the first half on costs linked to the sale of Taiwanese operations. However its operating profit rose six percent, helped by strong sales growth in the United States.
AFP / Expatica