By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- Stocks in Europe closed higher Tuesday, as better-than-expected earnings from Siemens and Novartis and optimism from U.S. consumers offset concerns on Chinese loans restrictions and lackluster economic data out of the U.K.
Having resided in negative territory for much of the day and having dropped the last four sessions, the pan-European Dow Jones Stoxx 600 index finished with a rise of 0.5% to 249.41.
Health sector stocks led the advance.
Shares of Novartis /zigman2/quotes/203286410/delayed CH:NOVN +1.12% /zigman2/quotes/203243705/composite NVS +0.48% rose 2.1% on the SIX Swiss Exchange after the Swiss pharmaceutical giant reported a 50% profit jump. The company also said the head of its pharmaceutical unit, Joe Jimenez, will take Daniel Vasella's role as chief executive next week. Vasella will stay on as chairman. See Novartis story.
Novo Nordisk /zigman2/quotes/203484366/composite NVO +0.81% shares rose 3.5% on OMX Copenhagen and touched an all-time high after it said it has received U.S. approval for its Victoza medicine to treat type 2 diabetes. The firm said that it has been granted marketing authorization for the drug. See Novo Nordisk story.
Ipsen /zigman2/quotes/200122335/delayed FR:IPN -0.18% rose 3.1% on Euronext Paris on hopes that its diabetes drug will also get regulatory approval. Ipsen's partner, Roche Holdings /zigman2/quotes/206324342/delayed CH:ROG +0.92% , rose 1.2%.
Regionally, the U.K. FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.27% rose 0.3% to 5,276.85, the German DAX index /zigman2/quotes/210597999/delayed DX:DAX +0.01% added 0.7% to 5,668.93 and the French CAC-40 index /zigman2/quotes/210597958/delayed FR:PX1 +0.08% gained 0.7% to 3,807.04.
On the European data front, the U.K. economy continues to struggle and data showed that it just exited recession in the fourth quarter. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0165% declined 0.8% to $1.6118 after GDP only rose 0.1% quarter-on-quarter. Read more on GDP.
Data from Germany were more encouraging, after the Ifo Institute's business climate index rose by more than forecast in January. Read more on Ifo.
European indexes received a boost after data showing U.S. consumer confidence rose more than expected in January.
Earlier, stocks were weak amid reports that China is raising the reserve ratio on selected Chinese banks.
"I think that people are reacting to the potential for higher global interest rates," said Colin Morton, fund manager at Rensburg Sheppards Fund Management.
"It's made people nervous. We have been in the mode of cheap money since early last year, and now people are starting to think about the potential for withdrawal."
Higher interest rates usually make cash more attractive, can increase the cost of financing for companies, and mean that consumers have less to spend, he noted.
Asian countries are key consumers of commodities, and metal and oil futures were weak on Tuesday as well as miners. BHP Billiton /zigman2/quotes/208108397/composite BHP -0.60% shares fell 1% and Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -0.52% shares declined 1.1%.
On the European earnings front, shares of German conglomerate Siemens /zigman2/quotes/200873563/delayed DE:SIE +0.72% /zigman2/quotes/214908078/composite SI +3.52% rose 5.1% after its fiscal first-quarter profit rose to 1.48 billion euros from 1.20 billion euros in the same period a year earlier, beating analyst forecasts. See Siemens story.
Banco Popular Espanol shares climbed 5.5%. The lender reported a 24% rise in fourth-quarter net profit to 114.9 million euros, beating analyst expectations.
Munich Re /zigman2/quotes/205537285/delayed DE:MUV2 +0.47% shares were up 1.2% after the firm disclosed that Warren Buffett, chairman of investment firm Berkshire Hathaway, holds just over 3% of its shares.