MW: Growth, U.S. retail data send Europe stocks higher
Nokia tumbles 8% as it loses market share
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stocks closed at a level not seen in almost five months on Tuesday, as most bourses rose after better-than-expected data on German growth and U.S. retail sales.
The Stoxx Europe 600 index XX:SXXP +0.68% rose 0.7% to 270.54, its highest close since March 19.
“There’s a bit of relief rally from the growth data, which was weak, but not as bad as people had feared,” said Andrew Milligan, head of global strategy at Standard Life Investments.
“There [is also] still speculation that central banks will provide support. Markets think it’s just a matter of where, when and what kind of easing we’ll get,” he added. “An error for policy makers would be to not follow through with policy easing. We need easing to justify the rally we’ve seen in recent weeks.”
Heavyweight pharmaceutical firms buoyed the index, with Novartis AG CH:NOVN +1.14% up 1.1%, Sanofi AG FR:SAN +0.94% 0.9% higher and Novo Nordisk AS DK:NOVOB +2.90% up 2.9%. Germany’s Merck KGaA DE:MRK +3.81% added 4.2% after it raised its outlook for full-year earnings, as revenue in the second quarter rose 12%. See: Merck KGgA lifts outlook, revamp costs hit results
Bucking the positive trend, Nokia Corp. FI:NOK1V -7.89% NOK -7.28% tumbled 7.9% as research from Gartner showed the telecom equipment maker’s share of the total mobile device market fell to 19.9% in second quarter from 22.8% in the same quarter in 2011. See: Samsung widens handset lead against Nokia, Apple
Better-than-expected growth data
On the data front, gross domestic product figures from major euro-zone economies beat analyst expectations and inspired investors to buy into the region’s equity markets. In France, GDP data showed that the economy stagnated in the second quarter, but still exceeded expectations of a 0.1% contraction. See: French economy stagnates in second quarter of 2012.
The German economy grew 0.3% on a seasonally-adjusted basis in the second quarter, beating forecasts of a 0.2% rise. Compared with the same quarter last year, GDP rose 1% on a calender-adjusted basis. See: German GDP expands 0.3% in second quarter.
The growth rate in Europe’s largest economy is, however, still too weak to support longer-term growth in the region, Milligan said.
“The German economy really needs to be growing close to 2% a year to pull Europe out of the crisis,” he said. “The U.K., Scandinavia, Switzerland and the euro zone are all looking to export to Germany as a way to get economic activity.”
Euro-zone GDP contracted 0.2% in the second quarter, dragged down by a 1.2% decline in Portugal and a 0.4% fall in Spain. See: Euro-zone GDP falls 0.2% in second quarter
Meanwhile, the German ZEW economic sentiment indicator dropped to its lowest reading since December. See: German Aug. ZEW investor gauge lowest since Dec.
In the U.S., retail sales rose 0.8% in July, exceeding expectations of a 0.2% rise. See: Retail sales rise stronger-than-expected in July
Movers
Among notable gainers in European stock markets, oil refiner Galp Energia SGPS SA PT:GALP -0.34% added 1.3% after peer firm Petroleo Brasileiro SA BR:PETR4 +0.67% PBR +0.37% said it continues to find oil in the Carcara well. The deposit is in the same block where Galp Energia holds 14% of the stake. See: Petrobras continues to find oil deeper in Carcara.
Other oil firms were also on the rise, tracking oil prices higher. French oil major Total SA FR:FP +0.62% TOT +0.27% gained 0.6%, helping send the CAC 40 index FR:PX1 +0.70% 0.7% higher to 3,450.27.
In the U.K., oil group BP PLC UK:BP +0.91% BP +0.85% rose 0.9% and BG Group PLC UK:BG +0.61% added 0.6%.
The FTSE 100 index UK:UKX +0.56% advanced 0.6% to 5,864.78, further supported by a 0.6% gain from HSBC Holdings PLC UK:HSBA +0.58% HBC +0.47% . Read more about London markets
Standard Life PLC UK:SL +8.06% surged 8.1% after reporting a 15% rise in operating profit for first half of 2012.
Construction materials firm CRH PLC UK:CRH -4.84% fell 4.8%, after it said earnings for 2012 are expected to be similar to last year’s level.
Among German stocks, the rise for Merck helped lift the DAX 30 index DX:DAX +0.94% 0.9% to 6,974.39. Rival Bayer AG DE:BAYN +2.32% tracked Merck higher and added 2.1%.
Specialty chemicals firm Linde AG DE:LIN +0.81% LNEGY +0.34% gained 1.2%. The company said it has completed its previously announced acquisition of Lincare Holdings Inc.
Outside the major indexes, Belgian supermarket chain Delhaize Group BE:DELB +2.65% gained 2.7% after Citigroup lifted the stock to buy from neutral.
Sara Sjolin is a MarketWatch reporter, based in London.
