Europe close: Decent data helps lift regional bourses

The Stoxx 600 rose by 0.97% to 464.49, while the DAX was up by 1.64% at 15,578.39, and the CAC 40 increased by 0.88% to 7,348.12.

London’s FTSE 100, however, only edged up by 0.04% to 7,947.11.

The positive sentiment was initially driven by comments from a Federal Reserve official who called for a "slow and steady" approach to interest rate rises, calming concerns that the central bank may raise rates faster than expected.

“The FTSE 100 has underperformed its European peers today largely due to weakness in the energy sector which is offsetting the gains in basic resources, with BP and Shell sliding back,” said CMC Markets chief market analyst Michael Hewson.

“The general mood has also been helped by better-than-expected economic reports, which while raising concerns about further rate hikes, have also helped to create a mood that the economic picture may not be as dire as had been predicted at the start of the year.

“This mood has helped to boost European markets more generally with improvements in services sector PMI numbers for February, with the DAX also having a strong session, and on course for its highest close in over a year, helped by strong gains from the likes of Volkswagen, after the car company raised its 2023 adjusted operating margin to 7.5% to 8.5%, from 7.36%.”

In equities, Deutsche Lufthansa gained 5.07% after the German airline group reported a solid financial turnaround in its 2022 results.

The group swung to an adjusted EBIT of €1.5bn, from a loss of €1.7bn in the prior year, with revenue almost doubling to €33bn.

Its passenger airline segment benefited from a significant increase in demand for airline tickets, leading to an operating loss of €300m, a significant improvement from the previous year's loss of €3.3bn.

Lufthansa Cargo and Lufthansa Technik also reported record results.

Other airlines also gained, with easyJet rising by 4.19% and Wizz Air Holdings up by 4.91%.

However, educational publisher Pearson fell by 3.75% despite reporting better-than-expected annual profits driven by revenue growth and cost savings.

The company said it would grow sales by low to mid single digits this year and that profit was on track to meet current consensus forecasts.

In economic news, the eurozone economy expanded in February at its fastest pace since June 2022, according to a survey released on Friday.

The S&P Global composite purchasing managers’ index rose to 52.0 from 50.3 in January, coming in just a touch below the initial estimate of 52.3.

Its final eurozone services business activity index printed at 52.7 in February, up from 50.8 the month before and marking the highest level for eight months.

“A resounding expansion of business activity in February helps allay worries of a eurozone recession, for now,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

“Doubts linger about the underlying strength of demand, especially as some of the February uplift appears to have been driven by temporary drivers, such as unseasonably warm weather and a marked improvement in supplier delivery times - likely linked in part to China’s recent reopening.

“Nevertheless, there are clear signs that business confidence has picked up from the lows seen late last year, buoyed by fewer energy market concerns, as well as signs that inflation has peaked and recession risks have eased.”

In Germany, exports rose by more than expected in January, recording a 2.1% rise and rebounding from a sharp drop in the prior month, according to official data.

Exports rose 2.1% due to strong demand from the US and UK, with goods sent to the US 3.1% month-on-month and while those exported to the UK increased 7.8% on the same basis.

Imports fell by 3.4% versus December, and as a result, the foreign trade balance showed a surplus of €16.7bn in January, up from €10bn in December.

In the UK, the service sector returned to growth in February as business activity expanded at the fastest pace since June 2022, according to a survey.

The S&P Global/CIPS services PMI rose to 53.5 from 48.7 in January, coming in above the 50.0 mark that separates contraction from expansion for the first time in six months.

Its composite PMI, which measures activity in services and manufacturing, ticked up to 53.1 in February from 48.5 the month before.

Finally, activity in China’s services sector picked up more than expected in February amid a recovery in demand, according to a survey.

The Caixin services PMI rose to 55.0 from 52.9 in January, above consensus expectations for a reading of 54.5 and comfortably above the 50.0 mark that separates contraction from expansion.

Reporting by Josh White for Sharecast.com.