By Tommy Stubbington
European stocks shrugged off some patchy economic data Thursday,
helped by a rise for shares on Wall Street.
The Stoxx Europe 600 index was 0.4% higher midmorning. The gains
came despite a sharper-than-expected slowdown in euro-zone business
activity and disappointing Chinese manufacturing data which weighed
on Asian stocks.
Instead, markets took their cue from the U.S., where stocks
rose, only wobbling briefly after minutes from the Federal
Reserve's latest policy meeting that indicated officials debated
whether they might need to raise rates sooner than expected.
Despite the discussions on policy tightening, investors
generally remain comfortable that monetary policy will remain
supportive.
"Inflation remains benign. Yes, people will worry about rates
going up but they are not going up any time soon," said Julian
Chillingworth, chief investment officer at Rathbones, which manages
GBP23.9 billion ($39.7 billion) in assets.
The S&P 500 index gained 0.2%, as investors looked ahead to
Fed Chairwoman Janet Yellen's speech at the annual Jackson Hole
symposium. U.S. stock futures pointed to a further 0.2% rise at
Thursday's open. Changes in futures aren't necessarily reflected in
market moves after the opening bell.
That "will take center stage as investors gauge for more clues
on Fed's view on the labor market and in turn monetary policies,"
said analysts at Crédit Agricole.
In the euro zone, purchasing managers data showed a
slower-than-expected expansion in manufacturing and services
activity in August.
The data continue a recent downturn which saw economic growth
stagnate in the second quarter, amid concerns that the conflict in
Ukraine could hold back the region's fragile recovery.
Even so, major European indexes climbed. Germany's DAX, which
has fallen sharply in recent weeks, was 0.4% higher. France's CAC
40 gained 0.5%, while the U.K.'s FTSE 100 was up 0.3%.
"The overall message is that European growth is pretty anemic,
but people have factored that in by now," said Mr.
Chillingworth.
Safe-harbor German government debt has surged amid the recent
signs of deterioration.
On Thursday, 10-year German bond yields traded at just below 1%,
close to their recent all-time low. Yields fall as prices rise.
In currency markets, the euro inched up against the dollar to
$1.3270, having dropped below $1.33 for the fist time since
September last year on Wednesday.
The relatively hawkish minutes from the Fed should help fuel
further gains for the greenback, while the European Central Bank is
likely to maintain ultra-loose policy for some time, according to
Lutz Karpowitz, a currency strategist at Commerzbank.
"ECB President Mario Draghi will now see the euro depreciate
versus the dollar sooner than he had dared to hope. What we have
been waiting for months is now actually happening: the Fed and the
ECB are parting ways," he said.
Elsewhere in currency markets, the Norwegian krone surged to a
two-month high of 8.1563 against the euro after Norway's economy
expanded faster than expected in the second quarter.
In commodities markets, gold was 1.0% lower $1,282.20 an ounce.
Brent crude oil was down 0.7% at $101.62 a barrel.
Write to Tommy Stubbington at tommy.stubbington@wsj.com