Good news from China cancels out euro fears for markets

European shares started the month positively yesterday, buoyed by upbeat economic data from China that helped to allay concerns about growth rates there.

Basic resources stocks, including miners and other commodity companies, were the biggest sectoral gainers after data showed Chinese factory activity expanded at its fastest pace in five months in May.

Underscoring investor concerns about the global economy, the pace of growth in the US manufacturing sector unexpectedly slowed in May, causing some equity indexes to trim back earlier gains.

Slower-than-expected manufacturing growth in the euro zone piled pressure on the European Central Bank to act aggressively when it meets on Thursday, keeping the euro at a near four-month low versus the US dollar. LONDON The surge in resources stocks was exemplified by Anglo American and Rio Tinto Group, which rose 1.6 per cent to 1,480.5 pence and 1.4 per cent to 3,101 pence, respectively.

Tesco dropped 1 per cent to 300.6 pence. The company may report its worst UK sales in more than 10 years this week as discounters gain market share, Morgan Stanley predicted. J Sainsbury, which posts quarterly sales on June 11th, fell 2 per cent to 339.1 pence.

The insurer Standard Life fell 1.5 per cent after reports that a move to a collective pensions system would be formally put on Britain's legislative agenda later this week. Analysts mused that collective pensions could bring the overall level of charges down, eating into the profit margins of pension providers.

Beverage-bottling stocks Coca-Cola HBC and Rexam were up 3.3 per cent and 2 per cent respectively, with traders saying investors were coming back to the former after a 20 per cent drop in its share price year-to-date and to the latter after a £450 million cash return.

Pharmaceuticals group AstraZeneca, whose shares have lost ground over the last month after US rival Pfizer walked away from its bid, saw its shares rise 1.7 per cent after the company got positive data for two of its products. EUROPE Det Norske jumped 8.5 per cent to 68.70 kroner. The company's purchase of Marathon Oil Norge will add about 60,000 barrels of oil equivalent a day to production in 2014, its chief executive said. The deal should close in the fourth quarter if it wins the approval of regulators.

Air France-KLM advanced 2.6 per cent to €11.48. Dutch newspaper De Telegraaf reported yesterday that the airline plans to achieve its cost-cutting targets in three years.

Roche Holding added 1.7 per cent to 268 Swiss francs. The world's biggest maker of cancer drugs agreed to buy Genia Technologies for as much as $350 million as part of an expansion in the gene-sequencing market.

Banca Popolare di Sondrio increased 5.4 per cent to €5.11 after Corriere della Sera reported yesterday that the bank may be a candidate for a merger with Credito Valtellinese, which rallied 8.4 per cent to €1.15. NEW YORK Google pressured tech shares, fell 2.5 per cent to $557.83. A censorship watchdog said the company's services were being disrupted in China ahead of this week's 25th anniversary of the 1989 crackdown on pro-democracy demonstrators around Beijing's Tiananmen Square.

Facebook also slid 1.1 per cent as technology shares had the largest drop among 10 main industries in the S&P 500.

Ariad Pharmaceuticals

rose 5.9 per cent to $6.83 in heavy volume a day after saying its drug ponatinib showed anti-tumour activity in patients with advanced gastrointestinal tumours.

Protective Life

rose 12 per cent to $58.48 following news that Japanese insurer Dai-ichi Life was in advanced talks to buy the company. – (Additional reporting: Bloomberg /Reuters)

The Irish Stock Exchange was closed yesterday for the June bank holiday. the figures quoted are as at Friday’s close.