By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved firmly
higher on Tuesday as U.S. lawmakers appeared to be making progress
in ending the fiscal standoff and as Germany's DAX 30 closed at an
all-time high after upbeat sentiment data.
The Stoxx Europe 600 index rallied 0.8% to 314.82, closing at
the highest level in almost a month.
"[This rally] does feel a bit overdone. We haven't gotten
anything signed and delivered in the U.S. yet, so it's too early to
start cheering," said Peter Dixon, strategist at Commerzbank in
London.
"There is no real reason to expect markets to rally strongly
from here. If we do get some gains it could turn out to be a
temporary relief rally, which could be pulled back when earnings
start to bite," he added.
On the longer term, however, there should be more room for
upside.
"By the year-end or early 2014 there should be more scope for a
modest uptrend triggered by expectations for a better outlook for
2014, especially in the U.S. And of course, we would expect to see
tapering come back onto the agenda. Investors will start to rotate
out of fixed income and into equities," Dixon said.
Among notable movers in the index, shares of Rio Tinto PLC (RIO)
gained 4.3% after the heavyweight miner said its iron-ore output
rose to a new quarterly record.
Shares of Burberry Group PLC (BURBY) lost 7.6% after Apple Inc.
(AAPL) named the luxury-goods firm's Chief Executive Angela
Ahrendts as senior vice president of retail and online stores.
U.S. deal optimism
More broadly, investors in Europe welcomed developments in the
fiscal negotiations in U.S., with the debt ceiling looming and the
government shutdown moving into Day 15. On the Senate floor on
Monday, Senate Majority Leader Harry Reid said he was "very
optimistic" about concluding deals "this week" to raise the debt
limit as well as end the government shutdown. Sen. Mitch McConnell,
the minority leader, said he shared Reid's feeling that "we'll get
a result that's acceptable to both sides."
On Tuesday, media reports said House Republicans will push for a
separate bill containing the same extensions to the debt ceiling
and budget, but delays the medical-device tax for two years and
turns off the Treasury's capability to use so-called extraordinary
measures. A bit after the report, House Speaker John Boehner said
House Republican leaders are "working with our members on a way
forward".
Meanwhile, the White House said President Barack Obama will meet
with House Democratic leaders at 3:15 p.m. Eastern.
U.S. stocks rose on Monday, but traded lower on Tuesday. Asia
markets closed mostly higher.
German ZEW data
German data further provided investors with a reason to
celebrate. The ZEW sentiment survey showed that the economic
expectations indicator rose further above its long-term average in
October, to 52.8 points from 49.6 points in September--beating
economists' expectations for an unchanged reading.
Germany's DAX 30 index jumped 0.9% to 8,804.44, for the highest
closing level on record.
The U.K.'s FTSE 100 index picked up 0.6% to 6,549.11, while
France's CAC 40 index rose 0.8% to 4,256.02.
Shares of Ashtead Group PLC climbed 1.4% after J.P. Morgan
Cazenove lifted the equipment-rental company to overweight from
neutral.
Man Group PLC rallied 6.4% after UBS added the investment firm
to its most-preferred list. In the same vein, UBS added Schroders
PLC to its least-preferred list, sending the shares 0.3% lower.
Shares of Zurich Insurance Group AG added 1.1% after J.P. Morgan
Cazenove upgraded the firm to neutral from underweight.
Stora Enso Oyj climbed 5% after Goldman Sachs lifted the pulp
and paper firm to buy from neutral.
On a more downbeat note, shares of Schindler Holding AG slumped
5.9% after the elevator maker warned full-year profit will come in
lower than previously estimated.
SKF AB dropped 4.8% after the Swedish ball-bearing maker posted
weaker-than-expected third-quarter net profit, as currency
headwinds hit the results.
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