By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved firmly
higher on Thursday as investors welcomed upbeat manufacturing data
from China and earnings reports from Daimler AG and ABB Ltd. among
others.
The Stoxx Europe 600 index climbed 0.4% to close at 320.38,
after losing 0.6% the prior day. Before the loss seen on Wednesday,
the benchmark index rose for nine straight days and closed at the
highest level in more than five years on Tuesday.
"Short term, markets are very overbought. At some stage we are
going to see a little bit of cooling off, because markets are still
very strong and I can't see the gains extend from where we are
right now," said Joe Neighbour, trading analyst at Central
Markets.
"Ultimately I'm still a bull, but there's a lot of froth in the
market at the moment," he added. "Earnings have been pretty good,
but we still see a lot of read on the screen from individual
companies."
Shares of Celesio AG rallied 5.4% after McKesson Corp. (MCK)
made a 6.1-billion-euro ($8.3 billion) offer for the German
health-care firm. McKesson shares traded 3.7% higher in New
York.
Daimler AG added 3.3% after the car maker said third-quarter net
profit jumped, helped by lower taxes, efficiency gains and rising
sales.
On a more downbeat note, shares of Credit Suisse Group AG (CS)
gave up 2.8% after the investment bank's profit in the third
quarter fell short of expectations.
China data
More broadly, investors looked to China, where solid data
rekindled hopes that the world's second largest economy is
recovering. HSBC's "flash" reading of October's manufacturing
purchasing managers' index (PMI) rose to a better-than-expected
seven-month high of 50.9, up from September's final reading of
50.2. It remained just below the government's own PMI, which hit
51.1 last month. A reading above 50 signals expansion.
Mining firms, which are sensitive to growth indications from
China, were among notable movers in Thursday's action. Shares of
Antofagasta PLC picked up 1%, and BHP Billiton PLC (BHP) rose 1.4%.
Separately, BHP said it expects global commodities demand to grow
75% over the next 15 years driven in part by continued urbanization
in emerging economies. Metals prices were mostly higher.
Back in Europe, euro-zone PMIs released on Thursday signaled
expansion for the fourth month running. The composite PMI for the
euro zone fell from September's 27-month high of 52.2 and came in
at 51.5, but remained above the 50 no-change level for a fourth
successive month.
"Bearing in mind that the PMIs do not (and cannot) provide
pinpoint accuracy in signaling the pace of GDP growth, we think
that the overall message from today's surveys should be that growth
continues at a modest pace -- and, for now, let's not quibble over
whether that is shaping up to be a 0.2% pace or a 0.3% pace," said
James Ashley, senior economist at RBC Capital Markets, in a
note.
"In our view, there is nothing in this latest batch of readings
to cause us to change our short- or medium-term assessment -- and
we think that will also be the attitude taken by the ECB Governing
Council," he added.
Movers
Germany's DAX 30 index added 0.7% to 8,980.63, closing at the
highest level on record.
France's CAC 40 index rose 0.4% to 4,275.69 and the U.K.'s FTSE
100 index gained 0.6% to 6,713.18.
Shares of Shire jumped 9.3% in London after the pharmaceutical
firm raised its 2013 guidance as it reported a 22% rise in net
profit.
Ophir Energy PLC surged 9.1% after the oil and gas explorer said
it may sell part of its interest in three gas fields in
Tanzania
Outside the major indexes, ABB Ltd. rallied 5% after posting
better-than-expected third-quarter earnings, as the power and
automation giant benefited from stronger demand in the U.S. and an
improvement in Europe.
On a more downbeat note, shares of Husqvarna AB sank 13% after
the producer of outdoor power products reported a 13% drop in
third-quarter net income.
Shares of LM Ericsson Telefon AB slumped 5.3% after the maker of
wireless-network equipment reported an unexpected drop in quarterly
revenue following unfavorable currency headwinds and weak sales in
Japan.
Potash producer K+S AG lost 3.1% after rival Potash Corp. of
Saskatchewan Ltd. (POT) said its third-quarter profit sank 45%.
Income was hurt by weaker prices for its major fertilizer nutrients
and slumping potash sales in the wake of the collapse of the
Russian-Belarusian pricing cartel, the Canadian company said.
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