By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets moved higher on
Wednesday, as investors welcomed second-quarter GDP data from the
euro zone that showed the region has emerged from a
six-quarter-long recession.
The Stoxx Europe 600 index rose 0.4% to 308.92, setting it on
track for a fifth straight day of gains.
Posting the biggest gain in the index, Rentokil Initial PLC
surged 8.1% after the pest-control and hygiene firm reported a 5.2%
rise in first-half adjusted operating profit.
Shares of RWE AG lost 4.1%, after the German utility firm
reported a 38% drop in first-half net profit.
ThyssenKrupp AG lost 0.9%, after the German industrial
conglomerate posted a loss in the third fiscal quarter.
European markets started to move higher after data showed the
euro zone has emerged from an 18-month recession. The region's
gross domestic product rose 0.3% in the second quarter, ahead of
market expectations of a 0.1% to 0.2% expansion. The currency
bloc's GDP contracted by 0.3% in the first three months of the
year.
But even if the data paint a rosier picture of the area, it is
too early to talk of a sustainable recovery, analysts said. Read:
Euro-zone GDP: Time to pop the champagne?
Tom Rogers, senior economic adviser to the Ernst & Young
Eurozone Forecast, said "that even in those countries with the
sharpest rebounds the pace of recovery is unlikely to be sustained
in the second half of the year."
"Last weeks' retail sales data underlined the weakness of
household spending power even in the north; credit is still only
flowing to firms in certain countries, and demand from emerging
markets is slowing down," he said. "More needs to be done if the
apparent recovery of the past few months is to be more than simply
a bright spot in an otherwise difficult few years," he added.
Data showed the German economy grew 0.7% in the second quarter,
while the French economy expanded 0.5%, both numbers were ahead of
expectations.
"Germany's figure certainly suggests that the worse of the
economic turmoil in the country is over and the region's powerhouse
is back on its feet," said Ishaq Siddiqi, market strategist at ETX
Capital.
Germany's DAX 30 index rose 0.3% to 8,441.00, while France's CAC
40 index rose 0.6% to 4,118.05.
Bank of England minutes
The U.K. was also in the spotlight on Wednesday, after minutes
from the August Bank of England meeting showed eight out of nine
Monetary Policy Committee members were in favor of adopting forward
guidance on policy.
The BOE announced last week that it would keep its key lending
rate at a record low of 0.5% until unemployment falls to a
threshold of 7%, subject to certain conditions related to inflation
and financial stability.
In that vein, data from the Office for National Statistics
released Wednesday showed the U.K's unemployment rate held steady
at 7.8% in June, broadly in line with expectations.
The U.K.'s FTSE 100 index was slightly higher at 6,612.28.
Shares of GlaxoSmithKline PLC (GSK) rose 0.5% in London after
J.P. Morgan Cazenove lifted the drug maker to neutral from
underweight.
Outside the major indexes, shares of Celesio AG dropped 2.1%
after the German health-care firm cut its earnings outlook for the
year, citing continued competition in Germany and negative currency
effects.
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