Europe open: Stocks rally on strong Asian cues; IAG flies higher on upgrade 

European stocks kicked the week off on an upbeat note, taking their cue from a strong session in Asia, despite the release of disappointing Chinese and Japanese data.
At 0840 GMT, the benchmark Stoxx Europe 600 index was up 2.8%, Germany’s DAX was up 2.7% and France’s CAC 40 was 2.9% firmer.

Data released earlier showed China’s exports fell 11.2% in January from the previous year, while imports dropped 18.8%.

Meanwhile, figures from Japan showed the economy contracted at a seasonally-adjusted annual rate of 1.4% in the final quarter of last year, which was significantly weaker than the 0.8% contraction expected by economists.

Still, with the exception of the Shanghai Composite, stocks in the region rallied following the heavy sell off last week and amid hopes that the weak data would prompt further monetary easing from Beijing.

Japan’s Nikkei 225 rocketed 7.2%, while the Hang Seng index gained 3.3%.

“Stocks have soared in Asia, rebounding aggressively after last week’s falls and providing further impetus for European markets.. Recent moves have seen markets lurching from anticipation to despair, sometimes on the same day – so the hope is that this sharp move higher will set a more positive tone for investors, rather than just be seen as an opportunity to sell the rally,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“Global Central banks are yet again in the spotlight, with the People’s Bank of China intervening to boost the renminbi and Mario Draghi widely expected to discuss further support during his testimony this afternoon.”

On the corporate front, HSBC was higher after the bank said it would keep its London headquarters rather than move to Hong Kong.

London-listed consumer goods company Reckitt Benckiser rallied after its fourth quarter sales beat analysts’ expectations.

Property heavyweight Hammerson was in the black after posting a rise in full year pre-tax profit amid strong UK demand.

BAE Systems advanced after the defence firm said it has appointed Charles Woodburn to the newly-create role of chief operating officer, following weekend reports that it was lining him up to be the next chief executive.

Hennes & Mauritz shares popped higher after the Swedish retailer said sales in January rose 7% from the same month last year.

International Consolidated Airlines flew higher after Bank of America Merrill Lynch double upgraded the stock to ‘buy’.

On the data front, Eurozone trade balance figures for December are due at 1000 GMT. It looks to be a fairly quiet day other than that, with US markets closed for Presidents’ Day.

Source: ShareCast

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