Europe Stocks Close Higher; DAX at Multi-Year Highs
Weak GDP data for the U.K. wasn't enough to stop European shares rising on Friday as Germany's DAX Index reached a level not seen since January 2008 after business climate data was released.
The FTSEurofirst 300 Index climbed higher on Friday closing provisionally at 1173.22 points. Shares rose despite the U.K. reporting fourth-quarter gross domestic product (GDP). The preliminary figure showed a drop in output of 0.3 percent against the previous quarter. Sterling fell against the euro and the dollar but the FTSE 100 Index shook off the bad news and moved higher.
The U.K. economy grew 0.9 percent in the third quarter. Economists are concerned about a triple dip recession, with the U.K. economy seen contracting in the first quarter of 2013 as well.
On Thursday, Britain's Chancellor of the Exchequer (finance minister) told CNBC in Davos that the government would stick to its austerity plan, despite criticism from the IMF.
Earlier on Friday, Germany's Ifo business climate index showed a rise and pushed markets higher. The figure for January was 104.2 against a Reuters forecast of 103.0. The DAX Index rose on the news and closed provisionally higher by 1.41 percent. Germany's largest drug maker Bayer received a bullish note from Bank of America which also pushed the DAX higher, leading to the chemicals sector showing the most gains on the pan-European Euro Stoxx 600 Index.
"The recent surveys add to growing signs that the German economy is turning a corner after a sharp contraction at the end of last year, and a strong rebound should be underway," Barclays said in a research note.
European Central Bank President Mario Draghi said on Friday that financial markets are experiencing "relative tranquility" at the start of this year and all the indices point to a substantial improvement of financing conditions.
"The level of economic activity is in the process of stabilizing at very low levels and we foresee a recovery in the second part of the year," Draghi said at the World Economic Forum in Davos.
In Italy, investors are focused on the financial sector after the country's third largest lender Monte dei Paschi di Siena said on Thursday that it faced up to $1 billion worth of losses on derivatives trades. Italian Prime Minister Mario Monti came under fire in the Italian parliament over his handling of the crisis at the bank. On Friday, shares in the bank closed higher by 11.36 percent.
In stocks news, miner Anglo American reported fourth-quarter earnings, highlighting a rise in its coal, copper and diamond output but a fall for nickel, platinum and iron-ore production. Despite shares moving higher as the session opened, the stock closed down by 0.45 percent and the basic resources sector showed losses across European indexes. Swiss bank UBS also cut its outlook on mining company Salzgitter on Friday to sell from neutral.
French bank Credit Agricole announced it was selling a 5.2 percent stake in Spain's Bankinter. It also said that its regional banks which control Credit Agricole will have to take an impairment charge of 651 million euros ($871 million). Shares i the bank closed up 2.27 percent.
Mobile firm Nokia continued to extend its losses on Friday after an earnings release on Thursday where it said it had suspended its annual dividend payment for the first time in over 20 years. Shares closed 6.55 percent lower on Friday.