European Stocks, Bonds Higher as Eurozone Growth Accelerates

By Tommy Stubbington 

        European stocks found their footing on Wednesday after the previous session's losses as economic growth picked up in the eurozone.
        The Stoxx Europe 600 index was up 1.0% by midmorning after data showing growth accelerated inside the currency bloc in the first quarter.
        Although quarter-on-quarter growth came in marginally below expectations at 0.4%, the figures mark the fastest expansion since the second quarter of 2013 and confirm expectations that a modest recovery in 2015 is gathering pace.
        France's CAC 40 and Italy's FTSE MIB led the way, both rising 1.2% after growth in the two countries outstripped expectations. Germany's DAX was up 0.8% after data showing German growth slowed in the first three months of the year.
        Markets were steadier after Tuesday's 1.3% decline in the Stoxx Europe 600 as a renewed selloff in eurozone bond markets rattled investors' nerves.
        Bond steadied, helped by Tuesday's turnaround in the U.S. Treasury market. Germany's 10-year yield was 0.04 percentage point lower at 0.64%. Yields fall as prices rise.
        In currency markets, the euro gave up early gains to fall 0.1% against the dollar to $1.1208. Still, better eurozone data have fueled the common currency's rebound from a 12-year low of under $1.05 in March. At the same time, there have been signs of weakness in the U.S. economy that have dampened expectations the Federal Reserve will soon raise interest rates.
        The current level of the euro "mainly reflects concerns among market participants that the much promoted divergence of monetary policies on both sides of the Atlantic might die an early death," said Commerzbank currency strategist Esther Reichelt.
        The British pound was boosted by a fall in the U.K. jobless rate ahead of the Bank of England's quarterly inflation report, which will provide the latest hint on the likely timing of an interest-rate increase from the central bank. Sterling was up 0.2% at $1.5698.
        In commodities markets, Brent crude oil was up 0.8% at $67.92 a barrel. Gold was 0.2% higher at $1,194.50 an ounce.
        Write to Tommy Stubbington at tommy.stubbington@wsj.com
        (END) Dow Jones Newswires

        May 13, 2015 05:31 ET (09:31 GMT)

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