European stocks gain, FTSE up before budget

European stock markets rose on Wednesday in the wake of solid gains across Asia and as investors in London were kept busy with major company announcements ahead of Britain's budget update.

London's benchmark FTSE 100 index climbed 0.21 percent to 5,881.42 points, Frankfurt's DAX 30 gained 0.26 percent to 7,454.68 points and in Paris the CAC 40 also won 0.26 percent to stand at 3,589.76 in midday deals.

"In Europe we're now seeing the major indices reaching some significant levels so it will be very interesting to see how they react now over the coming days," said Craig Erlam, analyst at Alpari trading group.

"The FTSE is nearing a key level around 5,900, with a move above here representing a very significant move towards 6,000, where it hasn't traded above since July last year."

In foreign exchange deals, the euro edged down to $1.3092 from $1.3096 late in New York on Tuesday. Sterling was flat against the European single currency and dollar.

Gold prices increased to $1,703.41 an ounce on the London Bullion Market, from $1,697.75 on Tuesday.

In London, Britain's finance minister George Osborne was at 1230 GMT due to update his budget plans alongside revised government growth and debt forecasts.

"Ahead of a news-heavy afternoon in the US, market focus lands on Chancellor (of the Exchequer) George Osborne and his Autumn Statement," said CMC Markets senior analyst Michael Hewson.

"He is widely expected to push back his own deadline for deficit elimination by two-three years as growth slows."

Asian stock markets closed higher Wednesday on hopes for progress in talks in Washington aimed at avoiding a "fiscal cliff" of tax hikes and spending cuts.

China's shares bounced back from four-year lows, also on speculation that the country's government would soon unveil new plans for the economy, while data showing Australian growth remained buoyant provided some support.

In company activity, shares in HSBC rose 0.83 percent to 641.5 pence after the British banking giant on Wednesday said it would sell its stake in China's second largest life insurer Ping An to a Thai firm for $9.4 billion.

In a shift back towards its traditional banking business, the lender said it would sell its 15.57-percent holding to conglomerate Charoen Pokphand Group at HK$59 ($7.66) a share, making it the biggest foreign purchase by a Thai firm.

HSBC chief executive Stuart Gulliver said in a statement that the sale would benefit shareholders, but added that China remained "a key market for the group."

Britain's biggest retailer Tesco meanwhile rallied 2.77 percent to 335.70 pence as the supermarket group said it would likely exit its loss-making US business.

"It's likely, but not certain, that our presence in America will come to an end," Tesco chief executive Philip Clarke told reporters, as the company said it was launching a strategic review of Fresh & Easy which may end in a full sale.