Europe lifted by PMI data, China wobble hits Asia

Mon Dec 16, 2013 5:20am EST
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By Marc Jones

LONDON (Reuters) - Robust German PMIs helped Europe shrug off some mixed Asian data on Monday, though caution remained much in evidence just days away from what looks set to be a very close call on the fate of U.S. monetary stimulus.

European stocks started the week in better form than they ended on Friday, as an upturn among Germany's export-oriented manufacturers offset an unexpected slowdown in France to help the euro zone end the year on a high.

"It's really encouraging to see the increase in the overall rate of growth," said Chris Williamson, chief economist at Markit, which compiles the widely-watched purchasing managers index (PMI) surveys. "It's a reassuring signal that the recovery is still on track. We are not losing momentum."

Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI all overcame early wobbles to settle 0.3, 0.4 and 0.5 percent higher respectively as they bounced away from two-month lows.

Jan von Gerich, chief developed markets strategist at Nordea, said the PMI data painted an interesting picture but stressed they were likely to be little more than a diversion for investors with so much going on this week.

The Federal Reserve meets on Tuesday and Wednesday to discuss tapering its $85 billion of monthly bond buying and opinion remains divided on whether it will move this week or wait until January - or even March.

"Tomorrow we get inflation data from the U.S. which will probably shape the final expectations going into the meeting because that has been one of the things that has been holding the Fed back," said von Gerich.

"Some of the recent data has suggested the weakest inflation is behind us, but it has not all been that way ... so (considering tapering expectations) a downside surprise will have a bigger impact than a upside surprise."   Continued...

Pedestrians are reflected in an electronic board showing stock prices outside a brokerage in Tokyo December 12, 2013. REUTERS/Yuya Shino