European Markets Climbed On German Data & China Strength

(RTTNews) - The European markets ended Tuesday's session in the green. Investor sentiment received a boost from the strong performance of the Chinese stock market. German exports also expanded more-than-expected in July and the Eurozone economy grew more than initially estimated in the second quarter.

China's Shanghai Composite Index jumped by 2.9 percent, after a slew of support measures were unleashed by Beijing. The measures included tax exemption on dividends and a move to introduce a market-wide circuit breaker system to stabilize the market also helped investors shrug off weak data underlying weakness in the world's second-largest economy.

French industrial production and services activity are likely to continue increasing in September, the Bank of France said in a report on Tuesday, retaining its growth forecast for the third quarter.

The central bank continues to expect gross domestic product growth of 0.3 percent for the three months ending September. France's economic situation has improved, but more efforts are needed for a sustained recovery and to reduce unemployment, the country's Finance Minister Michel Sapin said on Tuesday.

In an interview to the RMC-BFM television, Sapin said the pace of the ongoing recovery is better, but not sufficient. He expects growth to be just above the official forecast of 1 percent this year. The government is aiming to achieve a growth rate close to 1.5 percent by the end of the year, he said.

On Monday, President Francois Hollande also said economic growth is likely to exceed the official forecast of 1 percent this year, but may not be adequate to bring down the country's high unemployment.

The country's jobless rate was 10.3 percent in the second quarter. The growth rate is expected to reach 1.5 percent next year.

Sapin said growth of 1.5 percent will prompt job creation that can lead to a sustainable reduction in unemployment. "We must continue or amplify the policies we have undertaken", the minister added.

Hollande also announced tax cuts of more than EUR 2 billion for next year, which are intended to benefit eight million low-income households. These would be financed by more spending cuts that will be announced in the budget and hence, these will not affect the government's deficit reduction plans.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.12 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 1.18 percent.

The DAX of Germany climbed by 1.61 percent and the CAC 40 of France rose by 1.07 percent. The FTSE of the U.K. gained 1.18 percent and the SMI of Switzerland finished higher by 0.64 percent.

In Frankfurt, Commerzbank surged by 6.86 percent after JPMorgan upgraded it to "Overweight" from "Neutral." Deutsche Bank also added 2.98 percent.

RWE advanced by 5.61 percent and E.ON gained 1.84 percent.

BMW increased by 4.13 percent and Daimler rose by 2.67 percent. Volkswagen also finished higher by 2.67 percent.

In Paris, Alstom rose by 1.40 percent, after the European Commission approved the proposed acquisition of its energy businesses by US-based General Electric.

Renault increased by 3.52 percent and Peugeot rose by 2.71 percent. Car parts maker Valeo also advanced by 4.48 percent.

Societe Generale climbed by 2.06 percent and BNP Paribas added 1.93 percent.

In London, Amlin surged by 32.52 percent after the specialty insurer agreed to be acquired by Japan's MS&AD Insurance Group Holdings, Inc. in a cash offer of 3.468 billion pounds.

RSA Insurance Group climbed by 0.20 percent. The company has signed contracts to sell its operations in Latin America to Suramericana S.A., the insurance subsidiary of Grupo de Inversiones Suramericana for about 403 million pounds in cash.

Mining stocks turned in a positive performance. Anglo American increased by 3.87 percent and Glencore gained 4.40 percent. Rio Tinto advanced by 2.60 percent and Fresnillo added 2.74 percent.

Whitbread, which reported second-quarter sales, fell by 1.59 percent.

Eurozone economy grew more than initially estimated in the second quarter as strong exports offset the decline in investment. Gross domestic product advanced 0.4 percent sequentially after rising 0.5 percent a quarter ago, Eurostat reported Tuesday. The first quarter growth was the fastest since the same quarter of 2011, when the economy expanded 0.9 percent.

German exports expanded more-than-expected to a record high in July, led by a weak euro, suggesting that it would again be the major growth engine in the third quarter.

Exports rose 2.4 percent month-on-month in July, which was the fastest growth since December 2014. Economists had forecast shipments to grow 1 percent reversing a 1.1 percent fall in June.

Similarly, imports advanced by a faster-than-expected 2.2 percent in July after declining 0.8 percent in June. Imports were expected to grow 0.7 percent.

France's trade deficit in July widened more-than-expected from the previous month as both exports and imports moderated, figures from the French Customs showed Tuesday. The trade deficit increased to EUR 3.299 billion from EUR 2.757 billion in June, which was the smallest since July 2009. Economists had forecast a shortfall of EUR 3.100 billion. A year ago, the deficit was EUR 5.557 billion.

Chinese exports declined for the second straight month in August even after the devaluation of its currency and successive interest rate reductions. Moreover, imports logged a double-digit decline signaling weak domestic demand.

Exports fell 5.5 percent year-on-year in August following the prior month's 8.3 percent decrease. Economists had forecast a 6.6 percent drop.

At the same time, imports slid 13.8 percent after easing 8.1 percent in July. Imports were expected to fall at a slower pace of 7.9 percent.

Consequently, the trade balance showed a surplus of $60.24 billion in August. It was well above the expected level of $48 billion.