European stocks extended gains into the tenth consecutive session Friday, as investors remained confident about the recovery potential of equities despite disappointing earnings from some of Europe's leading companies.
"The stellar run continues, with talk of an inevitable pullback falling on deaf ears," said Chris Hossain, senior sales manager at ODL Securities. "A return of confidence has given the markets real impetus to push higher," said Mr. Hossain.
The Dow Jones Stoxx 600 index was up 0.5% at 221.0, London's FTSE 100 index was up 0.7% at 4592.23, Frankfurt's DAX index was up 0.8% at 5273.2, and the CAC-40 index in Paris was up 0.6% at 3396.1.
Still, Friday's gains were vulnerable with volumes low in subdued trade, according to traders and second quarter GDP figures out of the U.K. were much weaker than expected.
"Today's GDP report is not good news for the U.K. economy and it is at odds with recent comments from Monetary Policy Committee members who seemed to suggest that GDP could be even stronger than market expected," said Annalisa Piazza, economist at Newedge Group.
Disappointing second quarter earnings from Microsoft Thursday set the earlier downbeat tone in Europe, still weighing on the broader market.
Microsoft's fiscal fourth-quarter profit dropped 29% as revenue fell across its business lines and the slump in PC sales and business spending hit the software giant.
The negative statement from Microsoft added weight to a technology sector which was also under pressure on L.M. Ericsson Telephone Co's second quarter earnings, which saw net profit fall on restructuring charges and losses at Sony Ericsson.
Shares in Ericsson fell 6.8%, while Nokia was off 0.4%. The Dow Jones pan-European technology index stood 0.8% lower at 171.5.
Nevertheless, on Wall Street Thursday, earnings from 3M and AT&T helped the Dow Jones Industrial Average mark its highest close of the year. It gained 188.03 points, or 2.1%, to 9069.29, pushing through its prior 2009 closing high of 9034.69 from Jan. 2, to mark its highest close since Nov. 5. The S&P 500 advanced 22.22, or 2.3%, to 976.29. This was its highest close since November 4, 2008 and it has now risen for seven of the last nine sessions.
"Earnings are showing in many cases that companies are increasing their bottom lines with lower revenue, which means that corporate management is taking responsible cost cutting steps to navigate the economic downturn," said Michael Farr, president of money manager Farr Miller & Washington. "This will prepare them to recover strongly on any economic upturn."
The positive tone sent Asian markets higher Friday, with Japan's Nikkei 225 closing up 1.3%, South Korea's Kospi Composite up 0.3 and Hong Kong's Hang Seng Index was last seen up 0.8%.
A lower Japanese yen helped exporter stocks in Tokyo, with Toyota up 2.4%, Sony up 1.7% and Canon up 4.4%. Still, "had it not been for Microsoft and other poor earnings, the Nikkei could have topped 10,000 this morning. Players won't carry long positions over the weekend knowing U.S. stocks may fall tonight," said Tachibana Securities Analyst Kenichi Hirano.
In the oil market, September Nymex crude futures were 39 cents higher on Globex at $67.55 a barrel, up from $67.16 in New York.
Turning to the currency markets, massive dollar selling by big Japanese banks, taking profit after the U.S. currency's rise to a two-week high overnight, pushed the currency down in Asia on Friday.
The U.S. dollar was lower against the yen, at ¥94.94, down from ¥95.10 late Thursday New York. Meanwhile, the euro came off its earlier lows on higher equities. The single currency was at $1.4215 from $1.4203 late in New York, and at ¥134.93, from ¥135.07.
