By Tommy Stubbington
European stocks climbed on Wednesday after better-than-expected
eurozone manufacturing data, a further sign that the region's
economy is picking up.
The Stoxx Europe 600 closed 0.3% higher, bouncing back from
early losses. The turnaround came after manufacturing-activity
figures for the eurozone were revised higher, meaning that the
sector grew more quickly in March than initially estimated.
The data are the latest signal that a modest recovery is taking
hold in the euro area, which has left investors bullish on European
stocks despite a huge first-quarter rally. The onset of European
Central Bank quantitative easing, or QE, has provided a further
tailwind for stocks, helping exporters and multinationals by
weakening the euro.
Still, the rally has paused in recent days, with the Stoxx 600
falling 0.6% on Tuesday amid worries over Greece's negotiations
with its creditors and a slide in oil prices that weighed down
energy stocks.
"The retreat should not sour the mood of eurozone investors too
much, given the scale of the gains over the last three months,"
said Ian Williams, economist and strategist at brokerage Peel
Hunt.
Germany's DAX rose 0.3% on Wednesday, France's CAC 40 added 0.6%
and the U.K.'s FTSE 100 advanced 0.5%.
Despite the gains in stock markets, government bonds--which
typically suffer when investors look to riskier assets such as
equities--continued to surge in the eurozone, with the 10-year
German yield falling to a record low of 0.16%. Yields fall as
prices rise.
The rally in government debt has been sparked by QE, with the
central bank aiming to buy billions of dollars worth of bonds that
are in short supply.
In currency markets, the euro rose 0.3% against the dollar to
$1.0772 after some weaker-than-expected U.S. jobs data. The single
currency had fallen sharply against the buck on Tuesday, but still
remains well above last month's 12-year low of under $1.05.
In commodities markets, oil bounced back from Tuesday's slide as
investors continued to eye nuclear talks between Iran and six world
powers which could raise the chance of increased Iranian oil
exports.
Brent crude was up 2.9% at $56.69 a barrel. Gold was 1.5% higher
at $1,200.70 an ounce.
Write to Tommy Stubbington at tommy.stubbington@wsj.com