By Andrea Tryphonides
European stocks rose Monday, as stronger-than-expected euro-zone production data fed hopes of economic recovery, boosting basic materials stocks, commodities and the euro.
The rebound comes after a sharp sell-off had taken shares to oversold positions. But the gains have done little to quiet fears that the bearish mood of May will make a quick return. "We suspect that at a minimum the current recovery will be followed by a retest of the recent lows," said David Shairp , strategist at JPMorgan Global Market Asset Group.
The pan-European Stoxx 600 rose 1.2% to 252.54, its fourth consecutive gain to its highest close in a month. France's CAC-40 gained 2.0% to 3626.04 and Germany's DAX added 1.3% to 6125.00. But the U.K.'s FTSE 100 lagged, rising 0.7% to 5202.13, thanks to continued pressure on key component, BP /zigman2/quotes/207305210/composite BP -0.08% .
The British energy company's shares lost another 9.3% on Monday. BP said its costs related to the Gulf spill are $1.6 billion so far. In addition, U.S. senators suggested that BP set aside $20 billion to deal with the oil spill, underscoring the difficult-to-predict political aspect of BP's challenges. BP's chairman is due to meet U.S. president Barack Obama this week, while Chief Executive Tony Hayward will make his first appearance on Capital Hill Thursday, in a Senate hearing investigating the company's role in the causes of the oil spill.
At the close of European stock trading, U.S. shares were higher. The Dow Jones Industrial Average was up 0.9% at 10303.50.
The euro rose following the release of strong euro-zone economic data that suggested the euro-zone's industrial recovery was continuing apace. Industrial production figures for April showed the sharpest year-on-year increase—at 9.5%—since records began in 1990. Economists had forecast an 8.7% year-on-year gain.
The U.K. pound was lifted by a report by the newly formed Office for Budget Responsibility that cut the government's borrowing forecasts, though the report also noted downward revisions to future growth.
The euro recently was at $1.2280, from $1.2094 late Friday in New York, while the U.K. pound was at $1.4780, up from $1.4528 late Friday.
Although the response to the day's economic news was very positive, the session was still rather quiet. Tuesday will be much more lively, with U.K. CPI at 0830 GMT, the German ZEW economic sentiment survey at 0900 GMT, along with the euro-zone trade balance. U.S Empire manufacturing and import price index are due at 1230 GMT.
Also, German Chancellor Angela Merkel and President Nicholas Sarkozy are currently meeting in Berlin, three days before a full European Union summit. The two leaders have disputed on how the union should deal with the debt crisis and single currency, and are hoping to thrash out some sort of consensus before the summit takes place.
Elsewhere, gold futures fell, as the strength of the euro and equities tempted investors away from havens. By the close of European equity markets, gold for August delivery on the Comex division of the New York Mercantile Exchange was down $9.90 per ounce or 0.8% to $1220.3. Light, sweet, crude for July delivery was up $2.14 or 2.9% at $75.80 on the New York Mercantile Exchange, having traded near four-week highs.
In major market action: French insurance giant Axa climbed 3.7% after the U.K.'s Resolution Ltd. said that it is in talks over the potential acquisition of the majority of Axa's U.K. life-assurance business. Resolution shares were suspended in London.
Société Générale rose 3.9% after the French bank said that its Credit du Nord arm is in exclusive talks to buy Société Marseillaise from mutual bank BPCE.
United Utilities /zigman2/quotes/203908003/delayed UK:UU -0.95% , up 0.9%, announced Monday that it will sell its principal non-regulated water interests in the U.K. and Europe to Veolia Water, a unit of French-headquartered Veolia, whose shares gained 1.7%.
Shares of Club Méditerranée jumped 9.1%. Over the weekend, the holiday company said that Chinese conglomerate Fosun has acquired a 7.1% stake, making it one of the Club Med's largest strategic investors, and that they agreed to a partnership to cooperate on building resorts in China.
Genmab shares surged 33% in Copenhagen amid market speculation that GlaxoSmithKline /zigman2/quotes/209463850/composite GSK +0.16% could make a bid for the biotechnology firm. Both firms declined to comment on the speculation. GlaxoSmithKline rose 0.3%.
Sarah Turner contributed to this article.
Write to Andrea Tryphonides at email@example.com