By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets climbed on Wednesday, with Frankfurt’s DAX 30 index ending at an all-time high after upbeat German consumer-confidence data and better-than-expected economic reports from the U.S.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.46% rose 0.6% to close at 324.04, after closing at the lowest level in almost two weeks on Tuesday.
The German DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +0.46% rose 0.7% to 9,351.13, marking an all-time closing high.
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“Equity markets are without any doubt in a Santa rally mood, and there is still more potential for an upward move by the end of this year. However, we may see some profit-taking ahead of next week’s U.S. employment data, which could flare up the tapering talk,” said Naeem Aslam, chief market analyst at AvaTrade. Tapering refers to the expected scaling back in the Federal Reserve’s $85 billion a month bond-buying program.
Data from Germany showed consumer confidence rose to the highest level in more than six years, buoyed by a robust jobs market and solid income expectations. The forward-looking GfK consumer-confidence indicator for December came in at 7.4, up from 7.1 in November and beating analyst expectations.
“This seems to corroborate my thesis of a domestic consumption-led acceleration in the German economy in the coming quarters (at the very least). The recovery from the global recession has so far been driven primarily by the German export locomotive, but I expect domestic (mostly private) consumption to take over as the main driver,” said Mads Koefoed, head of macro strategy at Saxo Bank, in a note.
Also in Germany, the biggest political parties Wednesday agreed to forge a coalition government led by Angela Merkel. Merkel’s conservative Christian Democratic Union, its Bavarian Christian Social Union sister party and the Social Democrats agreed after 17 hours of negotiations to introduce a national minimum wage and toughen labor-market rules, as well as boost spending on pensions, education and infrastructure.
Politics were also in the spotlight in Italy, where the Senate voted to oust former Prime Minister Silvio Berlusconi following his tax-fraud conviction earlier in the year. The news came after the European stock markets closed. The FTSE MIB index rose 0.8% to close at 18,924.79.
Data in the U.K. confirmed that the economy grew 0.8% in the third quarter, driven by the fastest rise in household spending in more than three years.
In the U.S., stocks edged higher after data showed jobless claims last week unexpectedly fell, while durable-goods orders fell less than forecast. A gauge of consumer sentiment also rose and beat analyst expectations.
Shares of Colruyt SA /zigman2/quotes/206016244/delayed BE:COLR +0.50% jumped 5.4% in Brussels after the food retailer reported a 9% rise in first-half earnings per share.
Compass Group PLC /zigman2/quotes/200043088/delayed UK:CPG -0.89% gained 1.3% after the catering firm said it will return 500 million pounds ($810 million) to shareholders via a buyback program, as it reported a rise in full-year sales.
HeidelbergCement AG /zigman2/quotes/202418791/delayed DE:HEI +0.19% climbed 1.4% in Frankfurt after Berenberg lifted the firm to buy from hold.
Shares of Veolia Environnement SA /zigman2/quotes/200641726/delayed FR:VIE +1.82% dropped 3% after Electricite de France SA /zigman2/quotes/201783867/delayed FR:EDF +0.67% late Tuesday sold its stake in the utility and waste management firm. EDF shares were 0.4% higher.
Shares of Accor SA /zigman2/quotes/203800565/delayed FR:AC -1.80% lost 7.5% after the hotel operator laid out a new growth strategy and said it will reorganize the firm into two separate business units.
De La Rue PLC /zigman2/quotes/206574260/delayed UK:DLAR -0.36% gave up 6% after Citigroup cut the currency printer to neutral from buy. The company rallied 9.4% on Tuesday after reporting a 19% rise in first-half pretax profit.
Solvay SA /zigman2/quotes/208629835/delayed BE:SOLB +0.87% dropped 2.5% after the Belgian chemicals firm cut its earnings target for 2016 to reflect recent asset sales and acquisitions amid tough market conditions.