The European markets finished in positive territory on Tuesday, after investor sentiment shifted to hopeful on optimism about action from policy makers to contain the debt crisis. A successful debt auction by Spain and reports that China is planning new economic stimulus for the second half of the year also contributed to the positive mood. Mining stocks received a boost from the China news and shares of banks turned in a strong performance.
The People's Bank of China injected CNY 220 billion into the money market through reverse repurchase operations on Tuesday, reports said. The central bank said it added CNY 150 billion using seven-day reverse repos at a yield of 3.4 percent and CNY 70 billion via 14-day reverse repos at 3.6 percent.
Spain saw a steep decline in borrowing costs at an auction on Tuesday amid speculation that the European Central Bank would resume its purchase of peripheral bonds. Further, markets are also hopeful that a series of bilateral meetings between key Eurozone leaders may produce a lasting solution to the region's prolonged sovereign debt crisis.
The Spanish Treasury managed to sell slightly more debt than it had planned in Tuesday's auction. The agency raised a total EUR 4.51 billion from the sale of 12 and 18 - month bills against a target of EUR 3.5 billion - EUR 4.5 billion.
The yield on the one-year debt declined to 3.070 percent from 3.918 percent in the previous sale on July 17. The 18-month paper was placed to yield 3.335 percent, which was less than the 4.242 percent fetched in July.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.00 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.32 percent.
The DAX of Germany climbed by 0.79 percent and the CAC 40 of France finished up by 0.94 percent. The FTSE 100 of the U.K. gained 0.57 percent and the SMI of Switzerland rose by 0.19 percent.
In Frankfurt, Merck fell by 0.55 percent. DZ Bank downgraded the stock to "Hold" from "Buy."
Commerzbank increased by 4.04 percent and Deutsche Bank gained 5.39 percent.
Singulus Technologies finished up by 0.90 percent, after DZ Bank reduced its rating on the stock.
In Paris, Societe Generale finished higher by 3.85 percent. BNP Paribas climbed by 2.44 percent and Credit Agricole added 4.97 percent.
In London, mining stocks climbed on hopes of stimulus measures in China. Anglo American rose by 3.58 percent and Antofagasta climbed by 3.26 percent. Kazakhmys gained 2.58 percent and Vedanta Resources added 4.49 percent. BHP Billiton increased by 1.51 percent and Rio Tinto advanced by 2.08 percent.
Glencore International reported a decline in its first-half profit, reflecting a fall in commodity prices. The stock finished higher by 1.77 percent.
Barclays gained 3.22 percent. The lender is in talks with its subsidiary Absa Group Ltd., to combine majority of their African operations.
Royal Bank of Scotland rose by 2.50 percent and Lloyds Banking Group gained 1.09 percent.
Homebuilder Persimmon decreased by 1.13 percent. The company reported a higher profit for the first half, as revenues benefited from increase in legal completions and higher selling prices.
Julius Baer rose by 3.12 percent in Zurich. The lender said Monday that it would limit its proposed rights offering to 500 million Swiss francs, from the previous plan of 750 million francs, as part of its capital raise to fund its acquisition of Bank of America Corp.'s (BAC) non-US wealth management unit.
Germany's leading index declined for the third consecutive month in June, data from a survey by the Conference Board showed Tuesday. The leading economic index decreased by 0.8 percent on a monthly basis to 103.2 in June, marking the third consecutive decline.
The U.K. public sector net borrowing, excluding the temporary effects of financial interventions, (PSNB ex) increased in July, data from the Office for National Statistics showed Tuesday. Net borrowing was GBP 0.6 billion in July, which was GBP 3.4 billion higher than in July last year when PSNB was -GBP 2.8 billion.
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