Europe stocks lifted by China GDP; telecoms rise
LONDON (MarketWatch) -- European stocks jumped and broke a two-day losing streak on Friday as resource shares climbed after China's economic-growth rate met market expectations and as telecoms rallied on a sector upgrade.
The Stoxx Europe 600 index (SXXP) jumped 1.3% to 256.26, following two sessions mired in the red as investors worried about global growth prospects. The benchmark extended gains after a positive open on Wall Street.
On a weekly basis, the Stoxx 600 rose 0.7%.
"There is a sense that the Chinese figures could have been a lot worse. The country is still in line to achieve 7.5% growth for the year, which is kind of saying China is on track," said Peter Dixon, strategist at Commerzbank. "Markets are breathing a moderate sigh of relief.
"The figures weigh to the likelihood that authorities will come in with some expansionary policy measures," he added.
Among notable decliners,
Energy shares gained ground as oil prices rose following the Chinese growth data. The expansion rate in the world's second-largest economy slowed to its weakest level in more than three years, but a 7.6% gross-domestic-product figure matched the expectations of economists polled by Dow Jones Newswires. Read more about Chinese growth data
The gains for European stocks could, however, prove to be short lived, Dixon said.
"In the course of recent months markets have been very volatile. The euro-zone crisis could easily dent market optimism once again," he said. "[The gains] are a reflection that there's a lack of bad news from Europe, which allows markets to focus on positive news from other places."
Data out of the U.S. were mixed, with the Producer Price Index for June coming in higher than expected, while the University of Michigan-Thomson Reuters consumer-sentiment index for July fell to the lowest level since December. Consumer sentiment lowest since December
Italy: auction and debt downgrade
A successful Italian auction further helped steer stock markets into positive territory. The government managed to sell 3.5 billion euros ($4.3 billion) -- the top end of its range -- of new 3-year bonds at lower borrowing costs as compared with a June sale. Read about lower Italian borrowing costs at bond sale
In the secondary markets, yields were rising, however, in the wake of Moody's cutting the government's bond rating to Baa2 from A3 with a negative outlook. Read more about Moody's downgrade of Italy.
Yields on benchmark 10-year Italian government bonds (10YR_ITA) rose 15 basis points to 6.05%, according to electronic trading platform Tradeweb. A basis point is 1/100 of a percentage point.
In Paris, France Télécom (FTE) surged 5.6% and media and telecom firm