EghtesadOnline: European stocks advanced in the first trading day of 2017, erasing earlier losses, after Italy’s better-than-expected economic data helped confirm a trend of stronger manufacturing in the euro area.
The Euro Stoxx 50 index was 0.5 percent higher as of 12:50 p.m. in London, with the U.K. and Swiss markets closed for holidays. The DAX index in Germany, the region’s biggest economy, jumped 0.9 percent and headed for its best day in two weeks, Bloomberg reported.
The broader Stoxx Europe 600 Index was up 0.5 percent, after slipping 1.2 percent in 2016, when it underperformed the S&P 500 index. The U.S. benchmark gained 9.5 percent from 2015.
- Italy’s FTSE MIB was up 1.5 percent Monday. Data showed the country’s manufacturing PMI rose to 53.2 for December versus 52.2 in November, while economists expected 52.3. The FTSE MIB had ended 2016 down 10 percent, hurt by political uncertainties as well as investor concern over the strength of the country’s banking system.
- German shares were led by gains in lender Commerzbank AG and utility RWE AG. A report showed manufacturing PMI reached 55.6 in December, the highest reading since January 2014.
- Euro-area manufacturing expanded last month at the fastest rate since April 2011, in a sign that the currency bloc’s recovery was intact heading into 2017.
- For Stephane Barbier de la Serre, a strategist at Makor Capital Markets in Geneva, the consensus for Europe’s economic growth this year remains very cautious, which means any positive surprises in macroeconomic data may spur further gains in stocks
- “There’s a lack of commitment and conviction,” de la Serre said. “Most institutional investors are still underweight European equities, betting on a pull-back after the rally of the past few weeks, so we could see a bear trap in the first weeks of the year.”