By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets moved firmly higher on Thursday as investors welcomed upbeat manufacturing data from China and earnings reports from Daimler AG and ABB Ltd. among others.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.10% climbed 0.4% to close at 320.38, after losing 0.6% the prior day. Before the loss seen on Wednesday, the benchmark index rose for nine straight days and closed at the highest level in more than five years on Tuesday.
Germany accuses U.S. of spying on Merkel
Sara Murray and Anton Troianovski discuss alleged spying on German Chancellor Angela Merkel, and AnnaMaria Andriotis looks at rising home prices in U.S. cities. Photo: AP.
“Short term, markets are very overbought. At some stage we are going to see a little bit of cooling off, because markets are still very strong and I can’t see the gains extend from where we are right now,” said Joe Neighbour, trading analyst at Central Markets.
“Ultimately I’m still a bull, but there’s a lot of froth in the market at the moment,” he added. “Earnings have been pretty good, but we still see a lot of read on the screen from individual companies.”
Shares of Celesio AG DE:CLS1 0.00% rallied 5.4% after McKesson Corp. /zigman2/quotes/206975466/composite MCK +2.29% made a 6.1-billion-euro ($8.3 billion) offer for the German health-care firm. McKesson shares traded 3.7% higher in New York.
On a more downbeat note, shares of Credit Suisse Group AG /zigman2/quotes/205269278/delayed CH:CSGN -0.80% /zigman2/quotes/202835784/composite CS -2.31% gave up 2.8% after the investment bank’s profit in the third quarter fell short of expectations.
More broadly, investors looked to China, where solid data rekindled hopes that the world’s second largest economy is recovering. HSBC’s “flash” reading of October’s manufacturing purchasing managers’ index (PMI) rose to a better-than-expected seven-month high of 50.9, up from September’s final reading of 50.2. It remained just below the government’s own PMI, which hit 51.1 last month. A reading above 50 signals expansion.
Mining firms, which are sensitive to growth indications from China, were among notable movers in Thursday’s action. Shares of Antofagasta PLC /zigman2/quotes/200173667/delayed UK:ANTO +0.51% picked up 1%, and BHP Billiton PLC /zigman2/quotes/208108397/composite BHP +1.83% /zigman2/quotes/201448516/delayed AU:BHP +3.11% rose 1.4%. Separately, BHP said it expects global commodities demand to grow 75% over the next 15 years driven in part by continued urbanization in emerging economies. Metals prices were mostly higher.
Back in Europe, euro-zone PMIs released on Thursday signaled expansion for the fourth month running. The composite PMI for the euro zone fell from September’s 27-month high of 52.2 and came in at 51.5, but remained above the 50 no-change level for a fourth successive month.
“Bearing in mind that the PMIs do not (and cannot) provide pinpoint accuracy in signaling the pace of GDP growth, we think that the overall message from today’s surveys should be that growth continues at a modest pace — and, for now, let’s not quibble over whether that is shaping up to be a 0.2% pace or a 0.3% pace,” said James Ashley, senior economist at RBC Capital Markets, in a note.
“In our view, there is nothing in this latest batch of readings to cause us to change our short- or medium-term assessment — and we think that will also be the attitude taken by the ECB Governing Council,” he added.
Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +0.0049% added 0.7% to 8,980.63, closing at the highest level on record.
Shares of Shire jumped 9.3% in London after the pharmaceutical firm raised its 2013 guidance as it reported a 22% rise in net profit.
Ophir Energy PLC surged 9.1% after the oil and gas explorer said it may sell part of its interest in three gas fields in Tanzania
Outside the major indexes, ABB Ltd. /zigman2/quotes/201477239/delayed CH:ABBN -0.75% rallied 5% after posting better-than-expected third-quarter earnings, as the power and automation giant benefited from stronger demand in the U.S. and an improvement in Europe.
On a more downbeat note, shares of Husqvarna AB /zigman2/quotes/207716251/delayed SE:HUSQ.B -0.33% sank 13% after the producer of outdoor power products reported a 13% drop in third-quarter net income.
Shares of LM Ericsson Telefon AB /zigman2/quotes/207544813/delayed SE:ERIC.B -1.43% slumped 5.3% after the maker of wireless-network equipment reported an unexpected drop in quarterly revenue following unfavorable currency headwinds and weak sales in Japan.
Potash producer K+S AG /zigman2/quotes/205058230/delayed DE:SDF +2.72% lost 3.1% after rival Potash Corp. of Saskatchewan Ltd. said its third-quarter profit sank 45%. Income was hurt by weaker prices for its major fertilizer nutrients and slumping potash sales in the wake of the collapse of the Russian-Belarusian pricing cartel, the Canadian company said.