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German growth ignites stock rally; DAX up 0.94%

Published 08/14/2012, 12:46 PM
Updated 08/14/2012, 12:47 PM
Investing.com - European stocks closed higher Tuesday, boosted by better-than-expected German economic growth data, although investors remained cautious ahead of a string of key economic reports from the euro zone and the U.S.

At the close of European trade, the EURO STOXX 50 jumped 0.68%, France’s CAC 40 advanced 0.70%, while Germany’s DAX 30 rallied 0.94%.

Equity sentiment found support after official data earlier showed that Germany’s economy slowed less-than-expected in the second quarter, as exports and household spending helped to fend off the impact of the sovereign debt crisis on Europe’s largest economy.

German gross domestic product rose 0.3% in the three months to June, beating expectations for a 0.2% rise and following an increase of 0.5% in the first quarter.

Investor confidence was also boosted by expectations for fresh action by the European Central Bank to shore up growth, while recent weak data out of China and Japan added to speculation that other central banks may turn to fresh easing measures as well.

Financial stocks were broadly higher, as shares in French lenders Societe Generale and BNP Paribas climbed 0.99% and 0.95%, while Germany’s Deutsche Bank and Commerzbank advanced 0.84% and 0.94%.

Peripheral lenders were also sharply higher, with Italy’s Unicredit and Intesa Sanpaolo surging 1.84% and 1.63%, while Spanish lenders BBVA and Banco Santander rallied 1.15% and 1.28%.

Elsewhere, auto makers added to gains. German firm Daimler saw shares jump 1.49% and rival Volkswagen climbed 0.95%, while French groups Renault and Peugeot advanced 1.41% and 0.88%.

In London, FTSE 100 climbed 0.56%, as investors eyed the release of U.K. consumer price inflation data.

Standard Chartered remained one of the session’s top gainers for the second consecutive session, rallying 6.39%, as the U.K. lender pursued talks to reach an early settlement over charges it hid USD250 billion of transactions tied to Iran.

Meanwhile, shares in Barlcays surged 1.79% and HSBC Holdings climbed 0.70%, while the Royal Bank of Scotland and Lloyds Banking declined 0.22% and 0.35% respectively.

Oil and gas major Anglo American contributed to gains, with shares advancing 1.10%, as did BP, up 0.76%.

Also on the upside, mining giants BHP Billiton and Rio Tinto saw shares rise 0.48% and 0.05% respectively.

Bullish news from the U.S. helped lift shares.  Retail sales in the U.S. rose for the first time in four months in July, posting the largest monthly gain since February, official data showed on Tuesday.  

In a report, the U.S. Census Bureau said that retail sales rose by a seasonally adjusted 0.8% in July, easily surpassing expectations for a 0.3% increase.

Retail sales in June were revised to a 0.7% decline from a previously reported drop of 0.5%.

Year-on-year, retail sales rose at an annualized rate of 3.2% in July, after advancing at a rate of 2.6% in the previous month. 

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy.

Core retail sales, which exclude automobile sales, rose by 0.8% last month. Analysts had expected core retail sales to increase 0.4% last month, after falling by a downwardly revised 0.8% in June.

On an annualized rate, core retail sales rose 3.2% last month, after rising 2.6% in June. 

Core sales correspond most closely with the consumer spending component of the government's gross domestic product report. Consumer spending accounts for as much as 70% of U.S. economic growth.

In the U.S., equity markets traded higher with the Dow up 0.26%, the broad based S&P 500 higher by 0.28% and the tech heavy Nasdaq ahead by 0.27%

Traders are awaiting the U.S. CPI and TIC long term transactions on Wednesday.



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