European stocks jump despite weak data

European stock markets rose strongly Tuesday as traders focused on corporate earnings and brushed aside weaker-than-expected economic data out of Germany and China, seeing it as adding pressure on the ECB to act.

London's FTSE 100 index of leading companies rose 2 percent to 6,406.12 points, while in Frankfurt the DAX 30 climbed 2.41 percent to 7,658.21 points, and in Paris the CAC 40 jumped 3.58 percent to 3,783.05 points.

Madrid shot up 3.26 percent and Milan and Milan gained 2.93 percent.

In foreign exchange deals, the euro slid to $1.3011 from $1.3059 late on Monday in New York. Meanwhile the dollar again approached the key 100 yen level, buying 99.44 yen compared to 99.18 on Monday.

On the London Bullion Market, gold dropped to $1,408 an ounce from $1,424.50.

A widely-watched survey released Tuesday showed that private sector business activity remained weak across the eurozone in April, underscoring a gloomy medium-term outlook for the 17-state economy.

The Markit Eurozone Composite Purchasing Managers Index (PMI) registered 46.5 points, the same reading as March and well below the boom-and-bust line of 50 points indicating growth or recession.

It was the 19th time in 20 months that the survey of thousands of eurozone companies signalled a contraction in the single currency area's economy, with the powerhouse German economy seeing its first drop since November.

Martin van Vliet at ING Bank said the surveys show that eurozone remains mired in recession and "as such, the data will strengthen the hands of the doves on the ECB's governing council in arguing the case for a rate cut and/or additional unconventional policy measures."

The ECB's rate-setting council next meets on May 2, but Vliet saw the ECB as preferring to wait to act until June when its new staff forecasts for growth and inflation will be released.

"The Paris market is clearly betting on a future lowering of rates after the announcement of worse-than-expected European indicators," said Frederic Rozier, a portfolio manager at Meeschaert Gestion Privee.

Rising expectations of ECB action also helped push the yield on French 10-year government bonds to a record low of 1.704 percent in midday trading on secondary markets.

Yields on French government bonds have been pushed down over the past month as the European debt market has become flooded with easy money after the Bank of Japan engaged in aggressive monetary easing.

Meanwhile in London, "traders have shrugged off weaker-than-expected Chinese manufacturing figures and are focusing on strong trading updates from ARM and Associated British Foods," said David Madden, market analyst at IG traders.

Shares in British chipmaker ARM soared nearly 12 percent to close at 972 pence after the group revealed a 28-percent rise in first-quarter revenue.

HSBC's PMI survey showed manufacturing activity in China slowed in April, adding to concerns about the state of the world's number two economy.

Its initial PMI for the month came in at 50.5, from a final 51.6 in March.

"Ordinarily a hint of China slowing down would prompt traders to dump mining stocks, but the lower-than-estimated (Chinese) GDP figures last week took the sting out of today's announcement," said Madden.

In Frankfurt, the DAX had wind under its wings as shares in German airline Lufthansa rose 3.86 percent to 14.65 euros, as the company resumed a normal flight schedule a day after the company cancelled most of its domestic, European and long-haul flights as thousands of staff walked out in pursuit of higher pay.

US stocks also pushed higher.

The Dow Jones Industrial Average was up 0.96 percent to 14,707.02 points in midday trade.

The broad-based S&P 500 rose 1.03 percent to 1,578.57 points, while the tech-rich Nasdaq Composite Index added 1.20 percent to 3,272.26 points.

In Asia, shares in Hong Kong fell 1.08 percent and Shanghai tumbled 2.57 fell on Tuesday after data on the Chinese PMI data.

Tokyo closed 0.29 percent lower and Seoul fell 0.40 percent, while Sydney rose 1.00 percent.