Stocks up on AstraZeneca, Bayer, telecom earns

[July 29, 2010]  LONDON (AP) -- European stock markets rose Thursday after another batch of positive earnings and further evidence that Europe's economy is recovering faster than previously expected.

The euro broke out of its recent tight trading range to strike a fresh 11-week high against the dollar.

In Europe, the FTSE 100 index of leading British shares was up 33.11 points, or 0.6 percent, at 5,352.79 while Germany's DAX rose 33.33 points, or 0.5 percent, to 6,212.27. The CAC-40 was 16.28 points, or 0.4 percent, higher at 3,686.64.

Wall Street was poised to recover its losses Wednesday after the U.S. Federal Reserve said in its monthly assessment into the U.S. economy that "activity has continued to increase, on balance, since the previous survey."

Dow futures were up 49 points, or 0.5 percent, at 10,497 while the broader Standard & Poor's 500 futures rose 6 points, or 0.5 percent, to 1,108.40.

The gains in Europe came after an exceptionally busy morning of earnings releases.

Pharmaceuticals companies AstraZeneca PLC, drugs and materials company Bayer AG and telecommunications companies BT PLC and France Telecom SA particularly impressed

"While the jury is still out on how much upside there is left from current levels, today's positive earnings...have helped inject a little enthusiasm back into trading," said Anthony Grech, head of research at IG Index.

Continuing evidence of a step-up in the pace of economic growth in Europe also helped stocks rally.

Germany, Europe's largest economy, is seemingly doing particularly well -- figures Thursday showed the number of unemployed fell on a seasonally adjusted basis for the 13th month running.

Figures from the European Commission, meanwhile, showed that economic conditions across the eurozone improved further. Its economic sentiment indicator (ESI) rose to 101.3 points in July from 99 in June. Most analysts were not expecting much of a change.

The combination of solid earnings and economic news helped the euro rise up $1.3087, its highest level since May 4 -- by late morning London time, the euro was up 0.7 percent at $1.3079.

However, the main catalyst behind the latest euro advance was Wednesday's fairly pessimistic economic assessment from the U.S. Federal Reserve.

In its monthly Beige Book, an assessment of economic conditions around the regions, the Fed added to market concerns that the U.S. economy lost momentum in the middle part of the year.

The Fed's latest assessment came after the Commerce Department reported that orders for big-ticket items, known as durable goods, unexpectedly fell in June for the second month running.

Over the last few weeks, the economic newsflow out of the United States has generally underperformed market expectations, leading to concerns that the world's largest economy is not recovering from recession as easily as imagined and that the Fed will not be raising interest rates anytime soon.

That's important for the currency because rising interest rate expectations were one of the reasons why the dollar enjoyed a return to favor in the first few months of the year.

Friday's first estimate of second-quarter U.S. economic growth will be viewed in this context and any disappointment could weigh further on the dollar -- the consensus in the markets is that the U.S. grew by an annualized rate of around 2.5 percent in the second quarter. That's still relatively healthy but is not strong enough to promote sustained jobs creation.

"Tomorrow's GDP data though will likely confirm a slowing in the pace of recovery as inventory contributions fade and the impact of the fiscal stimulus peaks," said Neil MacKinnon, global macro strategist at VTB Capital.

Earlier in Asia, Japan's Nikkei 225 stock average fell 0.6 percent to 9,696.02 as investors locked in profits following a 2.7 percent jump the previous day.

South Korea's Kospi eased 0.2 percent to 1,770.88 while Hong Kong's Hang Seng index was steady at 21,093.82. Australia's S&P/ASX 200 dropped 0.1 percent to 4,524.1 on weakness in banks.

Benchmarks in China, Taiwan, Indonesia and Singapore rose.

Benchmark crude for September delivery was up 23 cents at $77.22 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 51 cents to settle at $76.99 on Thursday.

[Associated Press; By PAN PYLAS]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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