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European Markets Rebounded Tuesday On Strength Of Bank Stocks

The European markets rebounded from yesterday's sharp sell-off on Tuesday. A series of decent bond auctions in Spain the Netherlands and Italy eased concerns over Europe's debt crisis. Bank stocks were among the top performers Tuesday and provided support to the markets. The European markets gave back some of their gains in the afternoon, following the U.S. new home sales and consumer confidence reports.

The Netherlands held a successful debt auction on Tuesday despite the collapse of the government over budget cuts a day earlier. The Dutch State Treasury Agency raised EUR 1.995 billion from the sale of it 2- and 25-year bonds. The agency had planned proceeds between EUR 1.5 billion and EUR 2.5 billion. The 3.75 percent July 2014 bond was placed at an average yield of 0.523 percent. The 4 percent January 2037 bond was sold at a yield of 2.782 percent.

A parliamentary debate to discuss the political crisis, the interim budget cuts and a schedule of snap polls is expected to take place on Tuesday. Prime Minister Mark Rutte, who resigned yesterday, is due to address the parliament in the afternoon.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.86 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, finished higher by 0.82 percent.

The DAX of Germany climbed by 1.03 percent and the CAC 40 of France gained 2.29 percent. The FTSE 100 of the U.K. closed higher by 0.81 percent and the SMI of Switzerland rose by 0.16 percent.

In Frankfurt, Infineon Technologies increased by 2.14 percent. The company's U.S. peer Texas Instruments reported first quarter earnings that topped estimates.

Deutsche Bank increased by 1.58 percent on a report that Watson Pharmaceuticals, in which the German lender is a major debt holder, might announce a deal to buy Actavis for around $6 billion.

Commerzbank rose by 0.32 percent.

Deutsche Lufthansa gained 2.46 percent, after Credit Suisse upgraded the stock to "Outperform" from "Neutral."

In Paris, GDF Suez reiterated its guidance for 2012 earnings after reporting over 10 percent increase in first-quarter revenue. The stock closed higher by 0.58 percent.

Michelin increased by 6.14 percent, as the company reaffirmed its 2012 objective of reporting a clear increase in operating income and positive free cash flow.

STMicroelectronics climbed by 2.41 percent. The company expects second quarter revenues to increase between 4.5 and 10.5 percent.

Societe Generale finished higher by 3.55 percent. Credit Agricole climbed by 2.60 percent and BNP Paribas gained 3.40 percent.

In London, ARM Holdings dropped by 6.00 percent. The company warned of a slowdown in the growth of royalty sales from its processor division.

Royal Dutch Shell rose by 0.85 percent after the oil giant agreed to buy Cove Energy Plc for 1.12 billion pounds.

Anglo American Plc rose by 0.70 percent, after the diversified miner announced the final stage of the $1.4 billion Scaw Metals Group divestment.

Bank of America downgraded shares of both Imperial Tobacco Group and British American Tobacco to "Neutral" from "Buy." Imperial Tobacco Group fell by 0.95 percent and British American Tobacco declined by 1.80 percent.

International Consolidated Airlines Group climbed by 3.94 percent. Credit Suisse upgraded its rating on the stock to "Outperform" from "Neutral."

Barclays increased by 3.01 percent and Lloyds Banking gained 3.64 percent. Royal Bank of Scotland climbed by 0.65 percent and HSBC closed higher by 1.34 percent.

Novartis shares fell by 1.47 percent in Zurich, after the company reported a lower profit for the first quarter, hit by weaker sales of its blood pressure pill Diovan.

French consumer confidence unexpectedly increased in April, rising for a second consecutive month to its highest level in 17 months, data released by INSEE showed Tuesday. The seasonally adjusted consumer confidence indicator rose to 88 from March's 87. Economists had expected the index to remain unchanged.

The UK's public sector borrowing increased more than expected in March, according to the latest figures released by the Office for National Statistics, or ONS, on Tuesday. Meanwhile, the statistical agency's downward revisions to previous data allowed the government to keep its debts in line with its full-year target.

Public sector net borrowing, or PSNB, excluding temporary effects of financial interventions, was GBP 18.2 billion in March, up from last year's GBP 17.95 billion. The March borrowing figure was the highest since November 2010. This was also higher than February's downwardly revised reading of GBP 12.2 billion and economists' forecast of GBP 16 billion.

Home prices in major U.S. metropolitan areas showed a modest increase in the month of February, according to a report released by Standard & Poor's on Tuesday. The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index edged up by 0.2 percent in February on a seasonally adjusted basis.

New home sales in the U.S. showed a notable decrease from February to March but nevertheless came in substantially higher than most economists had predicted. According to figures released by the Commerce Department on Tuesday, new sales of single-family houses came in at a seasonally adjusted annual rate of 328,000 in March.

The March rate reflects a 7.1 percent drop from the revised February rate of 353,000. However, the February revisions brought the new home sales rate for the month up significantly from the 313,000 initially reported. Most economists had expected new home sales to rise from the initial February report, predicting a March sales rate of 318,000.

Consumer confidence in the U.S. was virtually unchanged in the month of April, according to a report released by the Conference Board on Tuesday, with the consumer confidence index coming in just below economist estimates. The report showed that the consumer confidence index edged down to 69.2 in April from a downwardly revised 69.5 in March. Economists had expected the index to slip to 69.7 from the 70.2 originally reported for the previous month.

by RTT Staff Writer

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