News Column

European Stocks Set To Rise After China Data

June 22, 2014

VIENNA (Alliance News) - European stocks are poised to open higher on growth optimism after a preliminary survey by HSBC showed China's manufacturing activity returned to growth for the first time this year, helped by the government's targeted approach to shore up growth. The HSBC/Markit Flash Manufacturing Purchasing Managers' Index (PMI) rose to 50.8, a seven-month high, compared with expectations for a reading of 49.7.

The Asian markets are trading mostly higher, although gains remain capped amid worries over Iraq. The Islamic State in Iraq and the Levant militants captured more territories on Sunday after overrunning border posts on the Iraq-Syrian frontier and seizing three towns including Rutba, affecting traffic links between Jordan and Iraq. US Secretary of State John Kerry urged Iraqi leaders to rise above "sectarian considerations" and said Washington is "not responsible" for what is happening in Iraq today.

In news out of Ukraine, Russian President Vladimir Putin supported the decision by President of Ukraine Petro Poroshenko on ceasefire in east Ukraine as well as his intent to take a number of specific measures to reach a peaceful settlement. At the same time, the President of Russia noted that the proposed plan would not be viable or realistic if no practical steps are taken to commence negotiation process.

In economic releases, investors eye private sector activity data from major Eurozone economies and reports on US manufacturing and existing home sales later in the day for further clues on the global economic outlook.

The Japanese yen strengthened against the greenback and euro after a preliminary showed Japanese manufacturing activity expanded for the first time in three months in June. The euro remains under pressure in the wake of dovish comments from the European Central Bank at the weekend.

In corporate news, French media and telecom giant Vivendi SA announced that it has signed a definitive agreement to sell its SFR unit to Altice/Numericable following constructive discussions with the Employee Works Councils.

Alstom's board unanimously approved GE's USD17 billion offer to acquire its power and grid businesses subject to the French Government acquiring a 20% stake in Alstom from Bouygues. The deal is expected to close in 2015.

The major European markets ended mixed on Friday as news of another blockbuster takeover bid in the pharmaceuticals sector and dovish remarks from the Federal Reserve offset disappointing consumer confidence data from the euro zone and concerns about the volatile situation in Iraq. The German DAX edged down 0.2% and France's CAC 40 shed half a percent, while the UK'sFTSE 100 rose 0.3%.

In the US the major averages rose about 0.2% each on Friday, with the Dow and the S&P 500 both reaching fresh record closing highs, as investors continued to digest the Federal Reserve's supportive policy announcement earlier in the week.

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Source: Alliance News

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