By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets advanced on
Tuesday, climbing back from their biggest three-day fall since June
last year, as miners rose after a broker upgrade and banks
recovered from recent sharp losses.
The Stoxx Europe 600 index added 0.6% to 324.06. On Monday, the
benchmark closed at the lowest level since Dec. 20 on renewed
uncertainty about emerging markets, after a slowdown in the Chinese
manufacturing sector spooked investors out of risky assets such as
equities.
Among major movers on Tuesday, Software AG rallied 7.4% after
the German company said it reached a record level of license sales
in the fourth quarter.
Mining firms were on the rise after Nomura lifted its rating on
the European metals-and-mining sector to neutral from bearish. The
analysts said BHP Billiton PLC (BHP) , up 1%, is now their top
pick, followed by Rio Tinto PLC (RIO), 2% higher.
Banks were also mostly higher after suffering some of the worst
declines in the recent days' market selloff. Shares of Banco
Espirito Santo SA gained 2.1% in Lisbon, and CaixaBank SA added
4.9% in Madrid. Lloyds Banking Group PLC (LYG) gained 3.3% after
the U.K. bank said it will cut around 1,000 jobs as it pushed on
with a three-year cost-cutting plan. Meanwhile, Barclays PLC (BCS)
picked up 1.7% after a person close to the matter said the bank is
set to cut several hundred investment-banking jobs, mainly at
managing-director level.
U.K. growth softens in fourth quarter
In macroeconomic news, data from the U.K. Office for National
Statistics showed the country's economy expanded at the strongest
pace since 2007 last year with gross domestic product rising 1.9%.
In the fourth quarter, however, growth slowed down to 0.7% from
0.8% in the previous quarter, which was broadly in line with
analyst expectations.
"There seems every reason to believe that robust growth will be
sustained into 2014, not least because of the promise of ongoing
ultra-loose monetary-policy stance from the Bank of England and
additional stimulus such as the Funding for Lending and Help to Buy
schemes," Chris Williamson, chief economist at Markit, in a
note.
The U.K.'s FTSE 100 index traded 0.5% higher at 6,581.30 after
the data. The pound (GBPUSD), however, initially moved lower as the
slower growth rate in the fourth quarter eased pressure on the Bank
of England to raise interest rates this year. The currency traded
at $1.6602 at the latest, down from a high of $1.6626 earlier in
the day but higher than the $1.6580 recorded late Monday.
The BOE had forecast a 0.9% rise in the fourth quarter, and Sam
Hill, senior U.K. economist at RBC Capital Markets, said in a note
that this is a relatively soft number from the central bank's
perspective.
"Now that output growth looks to be on a slightly less-lofty
trajectory path than they forecast in November, their overall
assessment of slack in the economy at the February Inflation Report
should help to dampen fears of an early rate-hike," he said.
Elsewhere, France's CAC 40 index picked up 1% to 4,187.13, while
Germany's DAX 30 index added 0.7% to 9,411.64.
Spain's IBEX 35 index climbed 1.5% to 9,903.90, after the
country's economy minister Luis de Guindos reportedly said gross
domestic product could grow by close to 1% in 2014, which is higher
than the current official forecast of 0.7%.
Banks helped lift the IBEX, with shares of Banco Santander SA
(SAN) up 2.1% and BBVA SA (BBVA) rising 2.3%.
Outside the major indexes, SKF AB , the world's largest
ball-bearing maker, jumped 6.3% after it said it expects demand for
products to improve in the first quarter compared with the same
period last year and with the fourth quarter.
U.S. stocks opened higher on Wall Street, even as economic data
pointed to a slowdown in economic growth. Durable-goods orders fell
4.3% in December and missed economists' expectations, while data
showed home prices fell for the first time in a year in
November.
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