European shares rise on stronger U.S. data, German deal

Wed Nov 27, 2013 12:36pm EST
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By Francesco Canepa

LONDON (Reuters) - European shares staged their sharpest rise in two weeks on Wednesday, driven by strong U.S. data, a long-awaited coalition deal in Germany and positive outlook comments from Italian insurer Generali (GASI.MI: Quote).

The pan-European FTSEurofirst 300 rose 0.5 percent, its biggest gain since November 14, to 1,300.51 points .FTEU3, taking its year-to-date gains to nearly 15 percent and keeping it on track for its best year since 2009.

Volume on the index, however, was 25 percent below its average for the past 90 days, suggesting there were relatively few investors behind the rise. Many traders were away ahead of Thanksgiving Day in the United States on Thursday.

Shares extended gains in late trade after the November Chicago Purchasing Managers Index and the final November Thomson Reuters/University of Michigan gauge of consumer sentiment beat expectations, indicating that conditions in the world's largest economy continue to improve.

In a sign of steady healing in the U.S. labor market, weekly jobless claims for unemployment benefits unexpectedly fell in the latest week.

Investors have been weighing the benefit of stronger growth in the United States, Europe's largest trading partner, against the prospect of reduced monetary stimulus from the Federal Reserve. The stimulus has helped to fuel a 19 percent rally in European shares since September 2012.

The reaction to recent estimate-beating U.S. economic data has been largely positive as investors are not expecting the Fed to start cutting back its stimulus program this year.

"Until we see some action from the Fed it will stay like that," said Mike Reuter, global equity broker at Tradition.   Continued...

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange August 26, 2013. REUTERS/Remote/stringer