By Sara Sjolin, MarketWatch
LONDON (MarketWatch)--European stock markets moved higher on
Wednesday, as China's new leaders implied they would continue their
supportive policy stance, while Nokia Corp. shares rallied on China
partnership news.
The Stoxx Europe 600 index rose 0.3% to 276.95, on track for a
third straight day of gains.
U.S. stocks opened higher on Wall Street.
"We have recently had good news out of China, starting this week
with good manufacturing data. But equally you also have to say that
there remains major concerns in the market, highlighted by weaker
U.S. manufacturing data earlier in the week," said Richard Hunter,
head of equities at Hargreaves Lansdown.
Shares of Nokia Corp. (NOK) put in the best performance in the
index, up 8.1%, after the Finnish mobile-phone maker said it is
launching a new Windows-based Lumia handset in partnership with
China's biggest operator, China Mobile Ltd.
Shares of Tesco PLC (TESO) added 2.8%. The British supermarkets
retailer said it would review its U.S. Fresh & Easy business
and said it is clear it won't "deliver shareholder returns on an
appropriate time frame in its current form."
Shares of Assa Abloy AB dropped 0.7%, after J.P. Morgan Cazenove
cut the lock manufacturer to neutral from overweight.
Euro-zone data was also in focus, after the region's composite
purchasing manager's index rebounded in November from a 40-month
low the prior month, but continued to signal a deep contraction in
private-sector output.
China in focus
Elsewhere, markets took inspiration from Asia, where most
bourses were in positive territory, after comments from a meeting
of China's new leadership on Tuesday signaled that an accommodative
economy policy would remain in place in coming quarters.
Additionally, it stressed it would actively promote urbanization,
expected to spur infrastructure investments and support Chine
growth.
"It also said it would make economic policies more targeted and
effective and fine-tune these policies in an appropriate and timely
way, indicating economic reform measures in coming years," analysts
at Danske Bank said in a note.
The optimism from Asia, however, wasn't enough to sustain a
strong rally, as investors continued to worry about the budget
wrangling between Democrats and Republicans in the U.S. The two
parties need to reach a deal to avoid a raft of tax hikes and
spending cuts slated to come into effect in the new year if no
action is taken--commonly referred to as the fiscal cliff.
"Even is the cliff is averted, the deficit still needs to be
addressed. We have seen risk-on, risk-off on a daily basis with the
underlying sentiment still nervous," said Hunter from Hargreaves
Lansdown. "Tax hikes are likely to hit companies. That's a reason
they don't want to invest all the cash that is sitting on the
sidelines."
"Initially, any sort of resolution will give markets a boost and
we can also move higher if we continue to get strong numbers from
China. Technically there could be some buying later this month as
people begin to think about closing their books for the year-end,"
he said.
Data from the U.S. showed 118,000 private-sector jobs were added
to the economy in November, according to ADP, in line with the
MarketWatch compiled estimate.
Separately, the increase in productivity in the U.S. in the
third quarter was revised up to 2.9% from an earlier estimate of
1.9%.
Movers
Resource firms, which generally rise on any growth indications
from China, were among the biggest gainers in Europe.
Shares of Rio Tinto PLC (RIO) climbed 2.9% in London, while
those of BHP Billiton PLC (BHP) added 2.1%. Metals prices were
higher across the board.
Banks were also on the rise in the U.K., as Citigroup lifted the
European banking sector to overweight.
Standard Chartered PLC picked up 1.3%. Shares of heavyweight
HSBC Holdings PLC (HBC) rose 0.6%, as the bank said it's selling
its entire stake in Ping An Insurance (Group) Co. of China Ltd. for
72.74 billion Hong Kong dollars ($9.39 billion).
The FTSE 100 index added 0.1% to 5,876.90.
In France, shares of BNP Paribas SA gained 0.2%, after Citigroup
added the stock to its Focus List Europe.
Shares of Renault SA climbed 1.1%, while Peugeot SA shares rose
0.5%, as Citigroup also lifted the European auto sector to
overweight.
The CAC 40 index gained 0.1% to 3,583.90.
And in Germany, shares of BMW AG rose 0.5%.
The DAX 30 index traded 0.1% higher at 7,438.15, with shares of Commerzbank AG up 1.2%.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires