Euro zone stocks rose on Thursday on news of stronger business activity, while London was firmer as investors digested the UK election announcement, lingering inflation concerns and strong results from Nvidia.
Stocks rose in Frankfurt and Paris after a major survey showed business activity in the euro zone accelerated in May.
The HCOB Eurozone Purchasing Managers' Index (PMI) released by S&P Global rose to 52.3 from 51.7 in April, the highest level in 12 months. A number above 50 indicates growth, a number below 50 indicates contraction.
The rise in the PMI was led by the services sector, which saw activity increase for the fourth straight month thanks to new business ventures, but manufacturing remained below 50, although its decline slowed.
“Today's PMI figures reaffirm our view that the euro area economy has finally turned a corner and will almost certainly record further expansion in the second quarter,” said Rory Fennessy, an economist at research consultancy Oxford Economics.
“However, the recovery is likely to remain gradual as easing of monetary policy will not provide a substantial boost to growth until next year.”
The London stock market largely ignored Wednesday's news that British Conservative Chancellor Rishi Sunak announced a general election would be held on July 4.
The right-wing Conservative Party has been in power since 2010, but has been battered by disappointment over Brexit, the cost of living crisis and a litany of scandals, with opinion polls consistently showing it has trailed the main opposition party for the past two years. It is lagging behind the Labor Party.
“Politics has moved to the top of the agenda as the UK general election campaign machinery prepares, but the only shock for investors is the big vote day,” said Russ Mould, investment director at AJ Bell.
“Markets remain calm until the Conservative and Labor Party's full election manifestos are released, albeit sooner than expected.”
Sentiment remained subdued a day after Britain's annual inflation rate beat expectations, dampening hopes that the Bank of England would cut interest rates soon.
Minutes from the Federal Reserve's most recent policy meeting showed that officials intend to continue raising interest rates for some time as the Federal Reserve struggles to bring inflation down to its 2% target. Asian markets were mixed on Thursday.
The news was somewhat offset by better-than-expected UK inflation, as well as better-than-expected earnings from US tech giant Nvidia, which reported a surge in profits and sales.
Stocks in the region are taking a breather after a recent rally on data showing inflation easing and the job market softening. Expectations are rising that the US central bank will start lowering borrowing costs by September.
But warnings from many decision makers who want to see more evidence that prices are under control are causing some dealers to have second thoughts.
– Key figures around 1100 GMT –
London – FTSE 100: up 0.1% to 8,375.57 points
Paris – CAC 40: up 0.3% to 8,112.80
Frankfurt – DAX: up 0.3% to 18,726.73
Euro Stoxx 50: up 0.5% to 5,047.59
Tokyo – Nikkei Stock Average: Up 1.3% to 39,103.22 (closing price)
Hong Kong – Hang Seng Index: down 1.7% to 18,868.71 (close price)
Shanghai Composite Index: 3,116.39 (closing price), down 1.3%
New York – Dow: down 0.5% to 39,671.04 (closing price)
Dollar/JPY: down to 156.74 yen from Wednesday's 156.75 yen
EUR/USD: up from $1.0826 to $1.0836
Pound/dollar: up from $1.2717 to $1.2708
EUR/GBP: down from 85.10 pence to 85.26
West Texas Intermediate: Up 0.8% to $78.20 a barrel
Brent crude: up 0.8% to $82.57 per barrel
Dan-RFJ/BCP/GV