European stocks climb to a six-year high on China data

Chinese manufacturing expanded at the fastest pace since December

Financial traders work on the floor of the Frankfurt Stock Exchange in Frankfurt, Germany. Photo: Bloomberg

Financial traders work on the floor of the Frankfurt Stock Exchange in Frankfurt, Germany. Photo: Bloomberg

 

European stocks climbed to a six-year high as a report showed that Chinese manufacturing expanded at the fastest pace since December.

Det Norske Oljeselskap rallied the most in 21 months after agreeing to buy Marathon Oil’s Norwegian business for $2.7 billion.

Air France-KLM added 3 per cent after a report that the airline will start a €1 billion cost-cutting program in 2015.

STMicroelectronics fell 1.8 per cent after Citigroup recommended selling shares in Europe’s largest semiconductor maker.

The Stoxx Europe 600 Index gained 0.2 per cent to 345 at 1.59 pm in London.

The benchmark advanced 1.9 per cent in May as European Central Bank president Mario Draghi said that the central bank was ready to ease monetary policy in June if necessary.

The ECB’s policy makers meet on Thursday.

“With European companies’ big exposure to the Chinese market, investors are carefully watching the data out of China,” said Kai Fachinger, who helps oversee €3 billion as a portfolio manager at RobecoSAM in Zurich.

“The PMI report implies a stabilization of the recent numbers that had shown some deceleration. Improving macro-economic data is supporting sentiment as investors wait to see what the ECB will do this week.”

In China, the government’s measure of manufacturing activity rose to 50.8 in May from 50.4 in April.

European mining companies posted the best performance of the 19 industry groups in the Stoxx 600, climbing 1 per cent. Anglo American and Rio Tinto rose 1.6 per cent to 1,480.5 pence and 1.4 per cent to 3,101 pence, respectively.

In Europe, a report confirmed that the euro area’s manufacturing industry expanded at a slower pace last month. Markit Economics’ PMI of activity in the 18-nation currency bloc slipped to 52.2 in May from 53.4 in April.

Bloomberg