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Forecast-beating German GDP sends DAX to record high
[LONDON] European shares rose on Friday, boosted by robust growth figures from Germany that sent the country's blue-chip DAX index to a record high and a recovery in Greek stocks.
At 1125 GMT, the FTSEurofirst 300 index of top European shares was up 0.6 per cent at 1,502.25 points, hitting a seven-year high. Germany's DAX was up 0.6 per cent, touching a record high at 11,013.850.
Data from Germany showed the economy grew by 0.7 per cent in the fourth quarter of 2014, much stronger than expected, with domestic demand lifting Europe's largest economy out of its mid-year lull. "The GDP numbers from Germany have picked up this morning. It's extremely reassuring that it's not losing momentum while the Greece situation remains unresolved," Veronika Pechlaner, European equity fund manager at Ashburton, said.
Greek banking stocks jumped 8 per cent, extending their recent rebound from a 75 per cent slump since last March, as investors began to bet that a meeting on Monday could see Athens reach a deal with its creditors.
National Bank of Greece was up 11 per cent and Bank of Piraeus up 6.3 per cent, while the leading ATG index gained 3.7 per cent. "A lot of people involved in the discussions are keen to keep the tone as positive as they can," Ashburton's Pechlaner said. "The market is using every little snippet on Greece to make an inference of the result. Markets for now think a deal will be made, but that might be complacent."
Markets have also been supported by strong earnings. Half way into Europe's earnings season, results have been strong overall, with 55 per cent of companies listed on the STOXX 600 exceeding analyst forecasts, according to Thomson Reuters data.
In a typical quarter, 48 per cent of companies beat estimates. Fourth quarter earnings are expected to grow 20.3 per cent.
Commodity related stocks are in focus this earnings season in the face of slumping prices, with Seadrill dropping over 8 per cent after the world's third-biggest offshore driller cut US$1.1 billion worth of Petrobras orders from its backlog due to the Brazilian firm's troubles.
However, shares in Aker Solutions surged 15.8 per cent after the Norwegian oil services firm posted fourth-quarter earnings well above expectations.
Shares in ArcelorMittal, the world's largest producer of steel, were up 3 per cent, reversing early losses. The group said on Friday its profit would fall in 2015, rather than improve as expected, although details about the group's debt reassured investors. "People knew about the low iron ore price but the low debt was a positive surprise," ING analyst Jaap Kuin said.