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Europe Shares Close Higher on US Data

European shares closed higher on Monday, shadowing gains on Wall Street, where the Dow bounced above the psychologically important 15,000 level. The pan-European FTSEurofirst 300 Index closed 0.9 percent provisionally higher at 1,162.28 points.

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In the U.S., manufacturing activity edged higher in June to 50.9, according to the Institute for Supply Management, a hair above expectations for 50.5. A reading above 50 indicates expansion in the sector. And construction spending rose 0.5 percent in May to an annual rate of $874.9 billion, rising to its highest level in nearly four years, according to the Commerce Department.

(Read More: The Market's Next Worry? The June Jobs Report)

Meanwhile, euro zone data showed unemployment was lower than expected in May, despite hitting a record high of 12.1 percent. In addition, previous unemployment estimations was revised downwards.

Plus, manufacturing PMI (Purchasing Managers' Index) data for the euro zone showed an uptick to 48.8, which was better than forecast and the highest since March 2012. However, a reading below 50 still marks sector contraction.

(Read More: Euro Zone Manufacturing Rebounds to 16-Month High)

"June's improved purchasing managers' survey supports hopes that overall manufacturing activity across the euro zone is on the brink of stabilization. This reinforces hopes that euro zone GDP could finally have stopped contracting in the second quarter, after a record six quarters of decline," Howard Archer, an economist at IHS Global Insight, said in a research note.

However, Germany's PMI came in lower than expected, which caused the German DAX index to fall briefly, before regaining ground. The index closed up 0.3 percent, underperforming other major European country indexes.

In Asia, upbeat consumer confidence data from Japan trumped weak industrial activity numbers from China, turning markets higher.

A survey showed Japanese corporate sentiment had turned positive for the first time in two years, as optimism about Prime Minister Shinzo Abe's radical stimulus policies offset concerns about recent market volatility.

"The risk is that the economy may be doing well enough that it actually dis-incentivizes the drive for structural reform. That would certainly lead to a dampening of market sentiment," said Alistair Newton, senior political analyst at Nomura.

(Read More: Will the Strong Tankan Send Abenomics Off Course?)

However, data from China showed that industrial activity continued to decline in June, amid concerns about overcapacity and weak demand.

"I think the story for China is basically that there is not any story left. Economic activity has peaked and we think that data will surprise on the downside," said Sailesh Jha, chief strategist at Arcus Capital Singapore.

Back in Europe, the European Union has demanded the U.S. responds to allegations in Der Spiegel newspaper that Washington spied on its officials. European leaders have warned the allegations could derail an EU-U.S. free trade deal worth billions of dollars.

(Read More: This Is Like 'Cold War': Europe Fumes Over US Spying)

In addition, Greece and its international lenders resumed talks to unlock 8.1 billion euros ($10.5 billion) of bailout loans, after a two-week hiatus during which the government almost collapsed over the closure of state broadcaster ERT. Greek shares traded lower, before turning positive along with other European markets.

In stocks news, financial services and basic resources outperformed on Monday afternoon.

Nokia shares surged to close around 3.5 percent higher after it reached a deal with Siemens to buy out profitable joint venture NSN. Share in Siemens closed around 1.80 percent up.

Shares of engineer Hunting bounced after the firm said it was confident of increased activity in its Gulf of Mexico operations in a trading update. And shares of retailer H&M ended around 4.80 percent higher after it was upgraded to "buy" by BoA Merrill Lynch.

However, shares in Finland's Yit plummeted by nearly 23 percent after the Finnish company said that negotiations to buy Germany's Hochtief Service Solutions had ended unsuccessfully.

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