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Europe: Shares hold on to 8-month highs on China data; Autos rally

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[BENGALURU] European shares ended higher on Wednesday led by a rally in auto stocks as better-than-expected sets of data from China assuaged investor concerns about the health of the world's second-largest economy.

The pan-European STOXX 600 index gained for a sixth straight session with Frances' CAC hitting a nearly 11-month high, while London's FTSE 100 ended flat.

China's economy grew at a steady 6.4 per cent pace in the first quarter, defying expectations for a further slowdown, as industrial production surged and consumer demand showed signs of improvement.

Analysts however, said it was too early to call a sustainable turnaround there, and further policy support would be needed to maintain momentum.

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The positive China data spurred demand for carmakers and suppliers in the region with the auto index touching near seven-month highs.

"It all has to do with better data from China because car imports basically collapsed in China recently, so if retail sales are better its a hope that car sales will pick up," said Teeuwe Mevissen, senior market economist at Rabobank.

The data also pushed Germany's 10-year government bond yield to a four-week high, helping banks record a fifth-straight day of gains.

In contrast to all that confidence, the German government significantly lowered the country's economic growth for 2019 on account of cooling global economy, increased trade conflicts and Brexit affecting Germany's exports.

"Despite the lower growth outlook for Germany there remains risk-on sentiment," said Mr Mevissen.

Among individual stocks, power grid maker ABB was among the top gainers on STOXX after chief executive Ulrich Spiesshofer quit the Swiss industrial group as the board and major shareholders look for a speedier turnaround.

A slew of positive news including upbeat earnings from semiconductor equipment maker ASML Holding, the China data and a Qualcomm-Apple settlement drove chipmakers in the region higher.

AMS, STMicro, Siltronic and Infineon Technologies - were all up between 1.7 per cent and 5 per cent boosting the tech index.

Also lifting the tech sector was Ericsson's 4.7 per cent climb after the company beat first-quarter result forecasts and raised full-year outlook for the global networks market.

Losses in healthcare and basic resources were among the biggest drags with BHP Group PLC, falling 2.5 per cent after cutting its forecast for iron ore output, a day after rival Rio Tinto slashed its output guidance.

Bunzl was the worst performer on the pan-European index, down over 9 per cent after the business supplies distributor said first-quarter growth slowed as the grocery and retail business in its biggest market - North America - remained sluggish.

Danone slid after the French food group's first-quarter sales slowed on weaker demand for infant formula products in China and a consumer boycott in Morocco.

Finland's Valmet fell 6 per cent after Berenberg cut its rating on the stock to "sell" on orders and cash concerns.

REUTERS