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European Markets Finished Higher After German Sentiment Surprise

4/20/2012 12:02 PM ET

The European markets closed to the upside Friday, thanks largely to the unexpected rise in Germany's IFO business sentiment. Shares of European banks recovered from their recent weakness and provided support to the markets. The positive performance of the U.S. stock markets also contributed to the upbeat mood in the afternoon. The U.S. rally was sparked by a number of positive earnings reports from huge companies such as General Electric, Microsoft and McDonald's.

German business sentiment improved unexpectedly in April on rising optimism among manufacturers, shrugging of concerns about the debt crisis. Marking the sixth consecutive monthly rise, business confidence rose slightly to a 9-month high of 109.9 in April from 109.8 in March, survey results released by the Munich-based Ifo institute showed Friday. Economists had forecast the indicator to fall to 109.5.

France will be in the spotlight over the weekend as the country begins the first round of its presidential elections. The race between Nicolas Sarkozy and his Socialist challenger, Francois Hollande, is predicted to be a close one.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.12 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, finished up by 0.72 percent.

The CAC 40 of France climbed by 0.46 percent and the DAX of Germany gained 1.18 percent. The FTSE 100 of the U.K. rose by 0.48 percent and the SMI of Switzerland closed higher by 0.55 percent.

In Frankfurt, Merck gained 3.13 percent. The company will abstain from major takeovers until the end of next year to focus on cost reduction and job cuts.

Deutsche Bank increased by 1.73 percent and Commerzbank gained 2.06 percent.

Hochtief fell by 1.81 percent, after Berenberg initiated the stock with a "Hold" rating.

GSW Immobilien dropped by 1.24 percent. HSBC downgraded its rating on the stock to "Neutral" from "Overweight."

In Paris, Suez Environnement increased by 2.13 percent. The company's first-quarter revenues grew 2.2 percent, amid a difficult economic environment in Europe.

Schneider Electric dipped by 0.06 percent. The company reported more than 9 percent growth in first-quarter sales.

Societe Generale gained 3.47 percent, after Bank of America upgraded the stock to "Buy" from "Neutral."

BNP Paribas rose by 3.68 percent, after Bank of America upgraded its rating on the stock to "Neutral" from "Underperform."

Accor declined by 2.31 percent, after Morgan Stanley downgraded the stock to "Equal weight" from "Overweight."

In London, IMI climbed by 1.85 percent. The company reported first-half results that were in line with expectations.

BP PLC dropped by 1.18 percent. The U.S. Department of Justice stated that an independent audit of claims found that BP owes an additional $64 million in damages from the Deepwater Horizon oil spill in the Gulf of Mexico.

Mining stocks were again a source of strength Friday. Anglo American climbed by 1.82 percent and Fresnillo gained 0.37 percent. Kazakhmys rose by 2.42 percent and Vedanta Resources closed higher by 3.08 percent. Rio Tinto also finished with a gain of 0.98 percent.

William Hill said first-quarter sales and operating profit increased from last year. The stock finished higher by 4.31 percent.

SuperGroup plunged by 38.23 percent after the company issued yet another profit warning.

In Zurich, Nestle fell by 0.17 percent. The company confirmed its 2012 sales growth forecast after reporting a 5.6 percent increase in first-quarter sales.

Germany's producer price inflation accelerated unexpectedly in March on higher energy prices, data from the Federal Statistical Office showed Friday. Month-on-month, producer prices rose 0.6 percent in March, faster than the 0.4 percent increase seen in February. The monthly rate was forecast to remain at 0.4 percent.

A leading indicator of the French economy increased modestly in February, after remaining unchanged in the previous month, data from a survey by the Conference Board showed Friday. The leading economic index increased by 0.6 percent month-on-month to 113.4 in February.

U.K. retail sales logged a better-than-expected expansion in March, boosting hopes of a good economic growth number in the first quarter. Including automotive fuel, retail sales volume grew 1.8 percent month-on-month, recovering from February's 0.8 percent drop, data from the Office for National Statistics showed Friday. The rate of growth topped the 0.5 percent rise forecast by economists and marked the biggest rise since January 2011.

by RTT Staff Writer

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