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European stocks gain ahead of ECB meeting; DAX jumps 0.95%

Stock MarketsMay 03, 2012 03:51AM ET
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This article has already been saved in your Saved Items - European stock markets were sharply higher on Thursday, as investors eyed the European Central Bank’s policy meeting later in the day amid sustained concerns over the handling of the financial crisis in the euro zone.

During European morning trade, the EURO STOXX 50 jumped 1.06%, France’s CAC 40 climbed 0.99%, while Germany’s DAX 30 advanced 0.95%.

Market sentiment was sharply hit on Wednesday after data showed that the final euro zone manufacturing index slumped to a 34-month low in April, while the unemployment rate in the bloc climbed to a record 10.7% in March.

Investors remained cautious ahead of the European Central Bank’s policy-setting meeting later in the day, amid ongoing concerns over elevated borrowing costs for vulnerable peripheral nations, particularly Spain.

The financial sector led gains as shares in French lenders Societe Generale and BNP Paribas surged 2.66% and 1.21%, while Germany’s Deutsche Bank saw shares rise 0.28%.

Earlier in the day, Societe Generale, France’s second-largest bank, reported a smaller decline in profit than analysts had estimated as a rebound in fixed-income revenue cushioned losses from the sale of corporate loans.

Meanwhile, France Telecom added to gains, with shares soaring 3.13% although the phone company reported an 8.1% decline in first- quarter profit as wireless discounter Iliad SA took market share. Sales topped estimates, however, because of roaming fees from the rival.

On the downside, shares in Novartis tumbled 1.20% after Europe’s largest drug maker said it will purchase Fougera Pharmaceuticals for USD1.5 billion in a deal to become the biggest seller of generic skin medications.

In London, FTSE 100 added 0.51%, as U.K. lenders tracked their European counterparts higher, while industry data showed that house prices in the U.K. fell unexpectedly in April.

Shares in Lloyds Banking jumped 1.01% and HSBC Holdings climbed 1.02%, while Barclays and the Royal Bank of Scotland edged up 0.14% and 0.08% respectively.

Energy stocks also contributed to gains as shares in Anglo American added 0.19%, while BP rose 0.73% after winning preliminary court approval of an estimated USD7.8 billion settlement to resolve more than 100,000 claims by individuals and businesses stemming from the 2010 Gulf of Mexico oil spill.

Mining stocks were mixed, as Rio Tinto dropped 0.76% and Bhp Billiton eased up 0.09%, while Xstrata and Kazakhmys declined 0.47% and 1.46%.

In the U.S., equity markets pointed to a steady open. The Dow Jones Industrial Average futures pointed to rise of 0.04%, S&P 500 futures signaled a 0.08% increase, while the Nasdaq 100 futures indicated a 0.12% gain.

Later in the day, the ECB was to announce its benchmark interest rate. The announcement was to be followed by a press conference with ECB head Mario Draghi.

The U.S. was to produce government data on unemployment claims, as well as preliminary data on nonfarm productivity and unit labor costs. In addition, the Institute of Supply Management was to produce a report on service sector growth.

European stocks gain ahead of ECB meeting; DAX jumps 0.95%

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