European stocks rallied on Tuesday to reach record highs as investors digest the latest set of factory activity and inflation data.

Euro zone manufacturing activity expanded at a record pace in May despite supple bottlenecks, a survey showed.

IHS Markit’s final Manufacturing Purchasing Managers’ Index (PMI) rose to a new record high of 63.1 in May from April’s 62.9. This was up from a prelim 62.8.

Inflation in the region hit its highest level since October 2018 as COVID-19 restrictions across Europe were scaled back, Eurostat said.

Consumer prices in the 19 countries sharing the euro reached 2.0 percent, beyond the target of the European Central Bank.

The pan European Stoxx 600 jumped 1.1 percent to 451.41 after declining half a percent on Monday. The German DAX soared 1.4 percent and France’s CAC 40 index climbed 0.8 percent.

The U.K.’s FTSE 100 was up 1.3 percent as trading resumed after a long holiday weekend.

The British pound reached a three-year high against the dollar in thin trade after the release of strong manufacturing and housing data.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) was finalized at 65.6 in May, up from April’s 60.9 as new work intakes rose at record rate.

U.K. house prices grew 10.9 percent year-on-year in May, faster than the 7.1 percent rise seen in April, data published by the Nationwide Building Society revealed. This was the biggest increase since August 2014 and was better than the economists’ forecast of 9.2 percent.

In stock-specific action, Daimler AG shares climbed 2.5 percent. The German automaker and Finland’s Nokia Corp. have signed a patent licensing agreement.

Under the deal, Nokia licenses mobile telecommunications technology to Daimler and receives payment in return.

Volkswagen advanced 2.3 percent. Speculation is rife that Porsche Automobil Holding SE, Volkswagen’s majority voting shareholder, would be separately listed.

Saint-Gobain shares rose over 2 percent. The world’s leading glass manufacturer has announced the sale of its Glassolutions Objekt-Center to privately-owned AEQUITA group based in Munich. Saint-Gobain noted that this sale is as part of its continued portfolio optimization strategy.

Drug maker Sanofi was down half a percent after announcing it has halted the clinical program of venglustat in autosomal dominant polycystic kidney disease (ADPKD).

CD Projekt slumped 8 percent as the Warsaw-listed videogame developer reported a worse-than-forecast 65 percent fall in quarterly profit.

Commodity-related stocks were rising in London as prices of copper and other metals rose.

Miners Anglo American, Antofagasta and Glencore surged around 4 percent, while oil majors BP Plc, Total SE and Royal Dutch Shell climbed 2-3 percent.

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