Good news from Germany lifts stocks

EQUITY MARKETS advanced yesterday on the back of positive economic data out of Germany.

Markets were also boosted after hopes of further quantitative easing were raised by US Federal Reserve chairman Ben Bernanke, who signalled concern about the strength of economic growth and made no mention of inflation risks in a speech yesterday.

“Any mention of any sort of quantitative easing and the market rallies hard on the back of it,” a Dublin broker said.

DUBLIN

BROKERS reported a pretty busy day on the Irish market, with sentiment boosted by an unexpected improvement in German business confidence coupled with Mr Bernanke’s QE hints.

In terms of domestic developments, Tullow Oil provided the main news with the announcement that it had found oil at an exploration well in Kenya.

“This could be the next oil play for Tullow. It could be really, really positive,” a broker said. “The market took that really well.”

On the London Stock Exchange, Tullow Oil rose more than 6.5 per cent to £15.70.

Ryanair made a very impressive move after EasyJet issued a strong set of results and upgraded its guidance. Ryanair was up more than 4 per cent at one stage during yesterday’s session. At the close, it was up 2.5 per cent at just below €4.43, a new four-year high.

The Iseq index finished almost 11 points higher, up 0.33 per cent.

LONDON

BRITAIN’S benchmark share index posted its biggest daily gain in two weeks yesterday, as expectations of looser US monetary policy and brighter German data gave investors fresh reason to push the market towards a retest of recent eight-month highs.

The FTSE 100 closed up 47.81 points, or 0.8 per cent. The surprise improvement in German business sentiment this month, as signalled by the IFO index, reassured investors yesterday after a run of gloomy global data.

US-focused companies were among the top performers. Wolseley, which earns about 40 per cent of revenue in the US, rose 2.2 per cent. Its US exposure earned the builder a mention as a top pick in Europe by JP Morgan, along with Balfour Beatty, which added 1.4 per cent.

“We are constructive on a six- to 12-months’ view as we find US recovery to be broadening beyond just manufacturing, both developed and emerging market policymakers are by and large equity friendly, despite key China risk,” its strategists said in a research note. “We . . . stay in ‘buying the dips’ mode.”

The brighter prospects for the global economy – not least through expectations of growth-stimulating moves from the Fed – boosted oil prices, propelling Britain’s heavyweight energy companies higher. The sector added 1.6 per cent, also getting a boost from news of fresh discoveries.

BG Group rose 1.8 per cent after unveiling its fourth Tanzanian gas discovery from the Jodari-1 exploration well. “The focus at the moment is on any explorer, any energy stock, that’s where any interest is,” said Steve Larkins, head of sales trading at Seymour Pierce.

EUROPE

EUROPEAN stocks advanced for a second day, although Spanish banks and construction companies fell.National benchmark indexes rose in 16 of 18 western European markets. Germany’s DAX rallied 1.2 per cent, France’s CAC 40 climbed 0.7 per cent while Spain’s IBEX 35 Index fell 0.5 per cent.

Lundin Petroleum rallied 7.1 per cent to 150.70 kroner after a well appraisal confirmed a previous find at its Johan Sverdrup Well off Norway. Technip jumped 4.1 per cent to €88.44 after Europe’s second-largest oil-services provider won its biggest North Sea contract, worth €600 million, from a BP-led group.

Banco Sabadell led Spanish lenders lower, falling 3.3 per cent to €2.17. Banco Bilbao Vizcaya Argentaria, Spain’s biggest bank, retreated 1.4 per cent to €6.16.

Italy’s prime minister Mario Monti warned that Spain could reignite the European debt crisis as euro-zone ministers this week prepare a deal to strengthen the region’s financial firewall.

Spanish construction-related companies also declined in Madrid trading. Actividades de Construccion y Servicios dropped 4.2 per cent to €20.22 and Sacyr Vallehermoso fell 1.2 per cent to €2.49.

US

STOCKS rebounded from last week’s losses, as Fed chairman Ben Bernanke said accommodative policy was still needed and investors speculated that the EU would increase the size of its bailout fund.

Gauges of healthcare, technology, consumer-discretionary and financial companies rose at least 1.6 per cent to lead gains in all 10 of the main industry groups in the SP 500. Market leaders American Express, JPMorgan Chase and United Technologies rose more than 2 per cent to lead gains in the Dow average. Lions Gate Entertainment rose 4.5 per cent as The Hunger Games film collected $155 million in weekend sales in the US and Canada, a record for March. – (Additional reporting Reuters/ Bloomberg)