By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved higher in
afternoon action on Thursday, as investors took inspiration from a
strong open in the U.S. where better-than-expected manufacturing
data provided support.
The Stoxx Europe 600 index rose 0.2% to end at 341.02, after
trading with a loss earlier in the day.
Gainers: SABMiller, Raiffeisen Bank
Helping lift the benchmark, shares of SABMiller PLC gained 3.5%
after the brewer reported a slight increase in full-year profit.
The company said its strength in developing markets such as Africa
and Latin America had held up in the past 12 months, but that it
sees continuing weakness in Europe and North America.
Also pushing higher, shares of Austria's third-largest bank in
terms of assets, Raiffeisen Bank International AG , picked up 6%
after the company reported an increase in first-quarter profit even
though tensions between Ukraine and Russia caused an increase in
risk provisions.
On a more downbeat note, shares of Royal Mail PLC slumped 9.7%
after the company said it faces a couple of headwinds, including
intense competition on the parcels side.
Lift from U.S. stocks
More broadly, markets nudged higher in the afternoon after U.S.
stocks opened in positive territory. The preliminary manufacturing
purchasing managers index for the U.S. in May rose to a three-month
high of 56.2, signaling a faster rate of expansion. Meanwhile
jobless claims rose more than expected last week.
Investors also took in a round of PMIs from Europe and the
latest developments in Ukraine. At least 11 soldiers died and 30
others were wounded in an attack on troops in Ukraine's eastern
region of Donetsk, according to media reports. The news came as
Russia appeared to be pulling its troop back from the Ukraine
border and Ukrainians prepare to head to the polls this weekend to
pick a new president.
Meanwhile, Markit's euro-zone composite PMI fell to a two-month
low of 53.9, from 54 in April. However, it came in slightly ahead
of expectations and stayed above the 50.0 level that indicates
growth. Markit said the data indicate the euro zone is having its
best quarter in three years and that "ongoing improvement in
business conditions was evident in both manufacturing and
services."
The country-specific readings showed further divergence between
powerhouse Germany and France, which has struggled with economic
headwinds recently. The French composite PMI slipped into
contraction at 49.3, while Germany stayed at 56.1 in May.
France's CAC 40 index gained 0.2% to 4,478.21, while Germany's
DAX 30 index put on 0.2% to 9,720.91.
Howard Archer, chief U.K. and European economist at IHS Global
Insight, said in a note that the PMIs indicate that the euro zone
is having trouble building growth momentum.
"The purchasing managers surveys do little to ease pressure on
the ECB to take decisive stimulative action at its June meeting,"
he said.
Speculation on ECB rate cut
European Central Bank President Mario Draghi hinted at the May
policy meeting that the Governing Council would be ready to launch
additional easing measures in June. The comments sparked widespread
speculation of another rate cut that would send deposit rates into
negative territory for the first time ever. The euro (EURUSD) has
been steadily following since the comment and traded at $1.3650 on
Thursday, down from $1.3683 late Wednesday. Ahead of the May ECB
meeting the euro traded close to the crucial $1.40 level.
In China, the manufacturing PMI rose to a five-month high of
49.7 in May, from a final reading of 48.1 in April, according to
the preliminary reading from HSBC. The data supported miners in
Europe, as they are heavily exposed to Chinese growth. Shares of
Antofagasta PLC picked up 2%, Rio Tinto PLC (RIO) rose 1.3% and
Glencore PLC (GLCNF) added 0.7%.
The gains weren't enough, however, to lift the U.K.'s FTSE 100
index , which closed marginally lower at 6,820.56.
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