Europe close: Stocks jump on strong manufacturing, service sector PMIs

European stocks were trading higher on Tuesday on the back of encouraging eurozone economic data, while HSBC was among the day’s biggest fallers after the bank reported a bigger-than-expected fall in profit.

The benchmark Stoxx Europe 600 index was up 0.64% to 373.40, Germany’s DAX rose 1.18% to 11,967.49 and France’s CAC 40 was 0.49% firmer to 4,888.76.

Meanwhile, oil prices gained, with Brent crude up 1.42% to $56.99 per barrel and West Texas Intermediate 1.28% stronger at $54.72.

On the data front, IHS Markit’s flash composite purchasing managers’ index for the eurozone rose to a 70-month high of 56.0 from 54.4 in January, beating expectations for a reading of 54.3.

Exhibiting similar strength, the purchasing managers’ index for the services industry jumped to 55.6 from 53.7 the month before, a 69-month high and ahead of expectations for it to remain unchanged.

Meanwhile, the PMI for the manufacturing sector increased to 55.5 from 55.2 in January, surpassing analysts' forecasts for a reading of 55.0.

In Germany, the manufacturing PMI rose to 57 from 56.4 in January, beating estimates of 56.0, while the composite PMI jumped to 56.1 from 54.8.

This marked a 34-month high and was ahead of expectations for a reading of 54.7.

In France, the index for manufacturing fell to 52.3 in February from 53.6 the month before, hitting a three-month low and missing expectations of 53.5. The composite PMI, however, rose to a 69-month high of 56.2 from 54.1 in January, comfortably beating expectations of 53.7.

Separately, London beckoned for French presidential candidate Emmanuel Macron who is to hold a rally in Westminster to court the French vote in Britain. Macron is gaining ground as the former front runner François Fillon slipped in recent polls following a payroll scandal concerning his wife.

The race for the Élysée Palace is heating up but worrying investors as the final run-off against Front National’s Marine Le Pen gets close. Le Pen has said that she would call a referendum on the euro and free France from the "tyrannies" of globalisation and Islamic fundamentalism.

Investors were also mulling Monday’s meeting of Eurozone finance ministers to deal with Greece’s debt crisis ahead of elections in the Netherlands, France, Germany and possibly Italy.

Analysts at Monex Europe said: “The euro also had an uneventful day yesterday but came under sell pressure against the dollar overnight. Greece and its creditors missed yesterday’s meeting of eurozone finance ministers as a deadline for a new debt agreement, meaning discussions will continue on an informal basis in the coming days, with the possibility of Greece being forced to leave the euro not completely ruled out.”

The euro was down 0.59% against the dollar to 1.0550 and 0.65% lower versus the pound to 0.8459.

In corporate news, HSBC slumped 5.91% after it reported a bigger-than-expected drop in annual profits. The largest company on the FTSE 100 delivered a reported profit before tax of $7.1bn that was down 62% on the prior year.

Wood Group sank 7.95% after the oil-services firm said that net profit for the year fell to $27.8m from $79m.

Telefonica was down 0.19% as it agreed to sell its 40% stake in its Telxius infrastructure unit to KKR & Co for €1.28bn.

On the upside, InterContinental Hotels drifted lower by 0.26% after reporting an increase in full-year operating profit and saying it will return $400m to shareholders via a special dividend and share consolidation.

Airbus was up 1.07% ahead of the publication of its full-year results on Wednesday.