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Market Update

European Stocks Rally As Data Supports

European markets opened up with strong gains Thursday after data showed German manufacturing activity expanded at its fastest clip in more than two years during August.

Britain's FTSE 100 gained 0.7% at 8:53 a.m. London time, France's CAC 40 Paris added 0.9% while Germany's DAX Frankfurt rallied 1%.

Data released by Markit showed Germany's preliminary manufacturing purchasing managers' index climbed to a seasonally adjusted 52.0 in August as compared with 50.7 in July. A reading above 50 indicates expansion in the economy, and vice-versa.

The August reading, meanwhile, came in well above analysts expectations of a gain of 51.2.

Another report indicated service sector activity in Germany also came in better than expected during August. The preliminary reading of the services purchasing managers' index rose to a six-month high of 52.4 in August, up from 51.3 in July.

The data reinforced investor confidence that the region's largest economy is back on track to a steady economic recovery, thus assuaging lingering concerns about the future of U.S. Federal Reserve's stimulus measures, at least for the time being.

Minutes from the July 30-31 meeting of the Federal Open Market Committee released yesterday showed Fed officials remained divided as to when the central bank should start cutting back on its monthly $85 billion bond-purchase program, thereby adding to the ongoing uncertainty over the Fed's future course of action.

Further supporting sentiment, another set of data released by Markit showed recovery in the euro-zone continued to gain traction in August, with business activity in the region hitting a 26-month high during the month.

Stocks on the Move

Financials notched robust gains -- French lenders BNP Paribas SA and Societe Generale SA were up more than 2% each while German banking giant Deutsche Bank AG rose 1.4% even as Commerzbank AG climbed around 2%.

In London, HSBC Holdings Plc. moved up 1.3% while Lloyds Banking Group enhanced a bit more than 1%.

Among miners, top runners included BHP Billiton Plc. and Rio Tinto Plc., both of which added around 1.5% each. Glencore Xstrata Plc. advanced 2.7%.

Retailers were among other performers today. French retailing giant Carrefour SA rose around 2% while Danone SA moved up 0.6%.

German retailing company Metro AG bounced 2.3% while London-listed Tesco Plc. improved 1.3%.