European stocks rally on bright World Bank outlook

A pedestrian uses her mobile phone as she passes a display of handbags in the window of Burberry Group’s store in London. Burberry shares jumped 4.6% to 1,537 pence yesterday.

AFP/LondonEuropean stocks rose yesterday as the World Bank declared the global economy was at a turning point, while the luxury goods sector was boosted by sparkling results from Burberry. Sentiment was also bolstered by solid German economic growth data, which propelled Frankfurt’s DAX 30 up 2.03% to a new record close of 9,733.81 points. London’s benchmark FTSE 100 index added 0.78% to end the day at 6,819 points and the CAC 40 in Paris rose 1.35% to 4,332.07 points, which beat its record close in 2013. “Regardless of concerns about a Fed tapering programme markets in Europe have pushed higher again today with the German DAX once again hitting new all-time highs,” said market analyst Michael Hewson at CMC Markets. Italian and Spanish markets also managed to push to their highest levels since July 2011, he added. Milan jumped 1.6% and Madrid advanced 1.4% to 10,525 points. “The extra impetus would appear to be as a result of the decision by the World Bank to upgrade its growth forecasts for developed markets for 2014 and 2015, though some fairly upbeat trading statements have also helped too,” said Hewson. The World Bank declared yesterday that the global economy was “finally turning the corner five years after the global financial crisis”, and hiked its latest economic growth forecasts. Global economic growth was estimated to hit 3.2% this year, accelerating from a 2.4% annual pace in 2013. In a further boost, official data showed on Wednesday that the German economy—Europe’s biggest—grew by 0.4% in 2013. Nevertheless, that marked a slowdown from 0.7% expansion in 2012, and was the weakest growth rate for four years. “Strong German GDP figures gave the Frankfurt market fuel to surge ahead of its European counterparts,” added Madden. European investors meanwhile welcomed Burberry’s latest quarterly results, which gave a shot in the arm to the luxury goods sector. Sales of Burberry’s luxury handbags and clothing soared over the crucial festive trading period, boosted by impressive growth in Asia, the British fashion group revealed yesterday. Retail revenues jumped 14% to £528mn ($866mn, 635mn euros) in the company’s third quarter or the three months to December 31, compared with a year earlier, Burberry said in a results statement. Comparable sales from stores open at least a year increased by 12%—with double-digit growth in the Asia Pacific region. In reaction, Burberry jumped 4.6% to 1,537 pence. Across in Paris, French luxury goods group LVMH saw its share price climbed by 1.9% to close at 128.70 euros. US stocks also pushed higher, following the rise in Europe, with earnings reports also helping fuel the advance. The Dow Jones Industrial Average advanced 0.68% to stand at 16,485.60 points in midday trading. The broad-based S&P 500 added 0.47% to 1,847.50, while the tech-rich Nasdaq Composite Index rose 0.60% to 4,207.91. Asian equities mostly rose after a surprisingly strong batch of retail data out of the US eased concerns about the world’s number one economy. Meanwhile in foreign exchange trading, the euro fell to $1.3598 from $1.3677 late on Tuesday in New York.