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European stocks jump on optimism over global recovery; DAX up 1.24%

Published 01/26/2011, 06:00 AM
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Investing.com – European stock markets were broadly higher on Wednesday, as market sentiment was boosted after U.S. President Barack Obama’s State of the Union address, while U.S. futures indexes pointed to a higher open on Wall Street.

During European morning trade, the EURO STOXX 50 jumped 0.84%, France’s CAC 40 rose 0.93%, while Germany's DAX surged 1.24%.

In his State of the Union address delivered late Tuesday, President Obama called for a five-year freeze on domestic discretionary spending to help reduce the national deficit and vowed to create jobs and spur growth.

Meanwhile, automakers performed strongly after German luxury automaker Porsche saw shares climb 2.90% after it reported a 63% jump in China sales in 2010, fuelling optimism over an increase in global auto sales as the economic recovery improves.

Europe’s largest automaker Volkswagen saw shares rally 3.28%, shares in rival BMW surged 2.19%, while French automaker Renault saw shares jump 3.87%.

Elsewhere, shares in the financial sector were broadly higher after Tuesday’s successful bond sales by the European Financial Stability Facility and by Spain.

Shares in Spain’s largest lender Banco Santander climbed 1.15%, rival BBVA saw shares surge 1.64%, while Europe’s largest banking group BNP Paribas saw shares rise 1.04%.

In London, the commodity-heavy FTSE 100 jumped 1.28% as miners led gains after metal prices rebounded from multi-month lows.

Shares in the world’s largest mining group BHP Billiton surged 2.19%, rival Rio Tinto saw shares jump 2.23%, while shares in copper producer Xstrata rallied 2.57%.

Meanwhile, shares in the U.K.’s third largest energy producer BG Group soared 3.35% after it said that it made a new discovery of light oil in the Santos Basin, offshore Brazil.

The outlook for U.S. equity markets, meanwhile, was upbeat ahead of earnings reports from the world's largest aerospace company Boeing and from the largest U.S. payroll processor Automatic Data Processing.

The Dow Jones Industrial Average futures pointed to a gain of 0.33%, S&P 500 futures indicated a rise of 0.43%, while the Nasdaq 100 futures pointed to an increase of 0.37%.
 
Later in the day, the Federal Reserve was to announce its Federal Funds Rate which will coincide with the publication of the bank’s interest rate statement. The country was also to publish official data on new home sales.


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