European Stocks rally to Two-week High

European stocks climbed Wednesday, as investors responded to corporate earnings reports and better-than-expected data from the eurozone.

The Stoxx Europe 600 SXXP, -0.25%  rose 1.3% to finish at 403.93, as the benchmark notched its best close since July 20, according to FactSet data.

Germany’s DAX 30 DAX, +0.16% put in a strong performance, climbing 1.6% to 11,636.30.

A decline in the euro against the U.S. dollar “appears to be supporting equities as the export oriented DAX is leading the rally,” said Guillermo Felices, head of European asset allocation at Barclays, in a note.

The euro lost ground against the dollar DXY, +0.04%  , falling back below $1.09 in afternoon trade after data showed U.S. services-sector activity jumped to the highest level in July since August 2005. The shared currency fetched $1.0869 versus $1.0884 late Tuesday. The euro briefly advanced after weaker-than-expected data on U.S. private-sector hiring in July.

“Earnings results have been solid,” aiding European equities, said Felices. With roughly half of Stoxx 600 companies posting financial results, 73% have beaten or have met per-share expectations, said Barclays. The median stock has beaten per-share estimates by a margin of 3.6%, above the 1.4% beat last quarter, said the note.

Miners: The mining group SXPP, -0.57%  charged higher in part after Liberum, in a “reluctant sector upgrade,” raised its rating to hold from sell on mining heavyweights BHP Billiton PLC BLT, -1.29% BHP, +1.64% BHP, +0.76% Rio Tinto PLC RIO, +2.08% RIO, +2.08% RIO, +1.08%  and RIO, +0.70% Glencore PLC GLEN, -1.23%  . BHP shares bounced 3.6%, Rio tacked on 3.9% and Glencore finished up 1.6%.

Also providing support for the basic materials group was an increase in July services-sector activity in China — a major market for commodity producers — to an 11-month high.

National indexes: The gains for miners benefited the U.K.’s FTSE 100 UKX, -0.25% with the British blue-chip benchmark closing up 1% at 6,752.41.

In Frankfurt on the DAX, Beiersdorf AG BEI, +0.33% shares popped 3.7%. The maker of Nivea and Eucerin skin-care products posted a 19% rise in second-quarter profit on higher sales and market-share gains.

France’s CAC 40 PX1, +0.05%  was up 1.7% at 5,196.73. The rise was led by a 7.9% jump in Société Générale SA shares GLE, +0.27%  after the lender said second-quarter profit increased 25% to €1.35 billion.

Greece’s Athex Composite Index GD, +1.31%   , meanwhile, dropped 2.5% to 643.22, led by a rout in bank stocks. Piraeus Bank SA TPEIR, -9.42%   slid 29.6%, flirting with the 30% downside limit.

Economic data: Markit’s composite purchasing managers index for the eurozone came in at 53.9 in July, a drop from 54.2 in June, but higher than the forecast of 53.7. The eurozone services PMI for July was 54.0, compared with 54.4 in June and a forecast of 53.8.

Retail sales in the currency bloc fell 0.6% in June from May, but rose 1.2% on the same month last year, the EU’s statistics agency said. Economists surveyed by The Wall Street Journal had estimated a 0.2% drop in sales. The retail weakness is a setback to the European Central Bank’s inflation goal of just under 2%.

Source: Market Watch