European stocks notched modest gains Thursday, with chip makers boosted by an encouraging forecast on U.S. sales and the broader market welcoming the release of upbeat economic growth and industrial output data from major trading partner China.
But U.K. equities were a source of pain, as traders fretted about the health of the British real-estate market and as shares of Primark owner AB Foods took a knock after a financial update.
What did stocks do?: The Stoxx Europe 600 index (STOXX:XX:SXXP) rose 0.2% to close at 398.74.
Germany’s DAX 30 index (XEX:DX:DAX) rose 0.7% to 13,281.43, and France’s CAC 40 (PAR:FR:PX1) ended 0.02% higher at 5,494.83.
But the U.K.’s FTSE 100 index (FTSE:UK:UKX) shed 0.3% to hit 7,700.96, squeezed by a rally in the pound (XTUP:GBPUSD) . Sterling bought $1.3904, up from $1.3830 late Wednesday in New York.
The euro (XTUP:EURUSD) bought $1.2243, up from $1.2188 on Wednesday.
What’s driving markets: European stocks appeared to get a boost from fresh economic data out of China, which is the European Union’s second-largest trading partner.
Shares of chip makers were lifted from a report forecasting that U.S. shipments of chips will reach $50.1 billion in 2021 .
The stronger euro, however, held gains in check as it rebounded to trade around a three-year high against the dollar. The stronger euro recently has prompted several European Central Bank officials to express concerns that the appreciating currency is putting downward pressure on inflation.
ECB policy maker Ewald Nowotny said on Wednesday that the euro strength is “not helpful,” while ECB Vice President Vítor Constâncio told Italian newspaper la Repubblica that monetary policy could stay “very accommodating for a long time.”
Strength in the euro can hurt shares of European exporters, as it cuts into the revenue and profit made in other currencies once exchanged.
What strategists are saying: “A small beat in China’s fourth-quarter GDP number removes a potential banana skin,” said Lee Wild, head of equity strategy at Interactive Investor.
“That the Chinese economy registered its first year-on-year growth since 2010, and the fastest growth in two years, is a bullish flag for both the global economy and equity markets,” Wild said in a note.
Stock movers: Among semiconductor stocks, Infineon Technologies AG (FRA:DE:IFX) gained 5.6%, while AMS AG (SWX:CH:AMS) climbed 4%.
Associated British Foods PLC shares (LON:UK:ABF) (OTC:ASBFF) dropped 3.6%, after the company said revenue from its sugar business fell, though this was offset by an increase at its Primark fast-fashion arm.
Shares of British online real estate listings firm Rightmove PLC (LON:UK:RMV) fell 3.7%, tracking a 19% slide in shares of Countrywide PLC (LON:UK:CWD) after the U.K. real-estate agent forecast a 9% drop in 2017 profit.
Whitbread PLC (LON:UK:WTB) shares pushed up 3.5% as the company, which runs the Costa Coffee and Premier Inn brands, said it’s on track to meet its full-year expectations.
Shares of Ryanair Holdings PLC (DUB:IE:RY4C) gained 2.7% after the low cost carrier said its U.K. pilots have voted to accept pay increases of up to 20%.
Steinhoff International Holdings NV (FRA:DE:SNH) picked up 5.1%. The company, currently in the process of restating its earnings after an accounting scandal, said it for the short term can back its debt obligations at the agreed-upon on rate.
Economic data: U.K. house prices bounced back in December, with the Royal Institution of Chartered Surveyors saying its monthly reading came in at a plus 8. Analysts polled by The Wall Street Journal expected, on average, the index to slip further, to minus 2.