The European markets largely finished in positive territory on Tuesday, recovering from yesterday's losses. One notable exception was the Spanish market. Spain remained under pressure due to concerns over the country's banks. However, expectations for further stimulus from China provided investors with optimism. The return of the U.S. markets to active trading, following the long Memorial Day weekend, also provided a boost.
Greece provided EUR 18 billion cash boost to its four largest banks as part of the recapitalization process, the Finance Ministry said in a statement on Monday. "The banks now have sufficient financial resources in support of the real economy," the Ministry said. The money was transferred from the Hellenic Financial Stability Fund, which holds the international bailout money.
The British economy may see a gradual recovery in growth this year, Bank of England Chief Economist Spencer Dale said in an interview aired on Tuesday. "We expect to see a gradual recovery in growth this year and, in terms of inflation - the data as you know has dropped from 5 percent to 3 percent - and we need to get it down further and back down to our target of 2 percent," Dale said.
The Euro Stoxx 50 index of eurozone bluechip stocks gained 0.59 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.56 percent.
The DAX of Germany increased by 1.16 percent and the CAC 40 of France rose by 1.17 percent. The FTSE 100 of the U.K. climbed by 0.65 percent and the SMI of Switzerland finished higher by 0.84 percent.
In Frankfurt, Volkswagen gained 4.46 percent. Barclays increased its price target on the stock. Shares of Daimler rose by 3.21 percent and BMW increased by 3.00 percent.
In Paris, ArcelorMittal closed higher by 1.75 percent. HSBC upgraded its rating on the stock to "Overweight" from "Neutral."
Renault finished higher by 4.04 percent and Peugeot gained 3.81 percent.
In London, mining stocks were a source of strength, due to optimism that China will move towards further stimulus measures. BHP Billiton climbed by 2.04 percent and Rio Tinto finished up by 2.26 percent. Anglo American gained 2.43 percent and Fresnillo added 1.97 percent. Vedanta Resources closed higher by 2.21 percent and Kazakhmys rose by 2.90 percent.
Wolseley declined by 1.00 percent, following its third quarter earnings report.
Germany's EU harmonized inflation weakened modestly in May, while economists expected it to remain unchanged, data released by the Federal Statistical Office showed Tuesday. The harmonized index of consumer prices increased 2.1 percent on an annual basis in May, slower than the 2.2 percent growth seen in April. Economists expected inflation to remain unchanged.
Month-on-month, the HICP decreased 0.3 percent in May, reversing the previous month's 0.1 percent gain. Economists expected prices to remain flat month-on-month.
Spain's retail sales declined by 11.3 percent year-on-year in April after logging a 4 percent drop in March, the statistical office INE said Tuesday. On a calendar adjusted basis, sales were down 9.8 percent, sharper than the 3.8 percent fall seen in the previous month.
Home prices in major U.S. metropolitan areas showed a modest monthly increase in March, 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 0.1 percent on a seasonally adjusted basis in March compared to a 0.2 percent increase in February.
After reporting a modest drop in U.S. consumer confidence in the month of April, the Conference Board released a report on Tuesday showing a further deterioration in confidence in May. The Conference Board said its consumer confidence index fell to 64.9 in May from a downwardly revised 68.7 in April. The drop surprised economists, who had expected the index to edge up to 69.7 from the 69.2 originally reported for the previous month.
by RTT Staff Writer
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