European Stocks Rise as Euro Region Economic Activity Surges to Six-Year High

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European equity benchmarks were rebounding from a lower open on Tuesday, after fresh data indicated that economic activity in the Eurozone rose to a six-year high in February and auto manufacturers advanced.

Financial research company IHS Markit's composite purchasing managers index (PMI) for the Eurozone, which tracks both the manufacturing and services sectors, climbed to a reading of 56 from 54.4 in January. Economists in an survey had expected a reading of 54.3. Markit said that economic growth may be 0.6% in the first quarter if this pace of expansion lasts into March.

Shares were lower earlier in the day on growing political concern after a poll showed French far-right presidential candidate Marine LePen widening her lead over her nearest rivals. Support for LePen, president of the National Front party, increased one percentage point from the previous month, to 27%, Politico reported late on Monday, citing a rolling monthly poll by OpinionWay. Backing for former economy minister Emmanuel Macron, who's running as an independent candidate, and former prime minister Francois Fillon, the conservative frontrunner, were unchanged at 20% each, Politico said.

In equities, financial stocks were under pressure after high street bank HSBC's pre-tax profit for 2016 missed analysts' estimates. HSBC declined more than 6% in London after reporting a 62% drop in 2016 pre-tax profit to $7.1 billion, compared with analyst forecasts of $14.4 billion on average in a Reuters survey.

Diversified miner BHP Billiton gained 0.7% after reporting earnings and unveiling a larger-than-expected dividend. Underlying first-half net profit rose to $3.24 billion from $412 million a year earlier, narrowly missing market forecasts for $3.4 billion, according to Reuters. Brokerage Hargreaves Lansdown slid 2% in London along with a broader downtrend among financial shares. France's Natixis bank dropped 0.6% and Deutsche Bank and Commerzbank slid 0.5% each in Frankfurt. French insurer AXA was down 0.8% and lender BNP Paribas lost 0.5% in Paris.

Carmakers benefited from the surprise increase in the February Eurozone composite PMI reading with Volkswagen adding 1.2% and auto parts maker Continental gaining 1.3% in Frankfurt. France's Peugeot gained 1.5% in Paris.

The pan-European STOXX 600 index advanced 0.2% rebounding from a lower open. The euro-region blue-chip STOXX 50 index also slid 0.2%. The DAX in Frankfurt gained 0.4%, while the FTSE 100 in London was 0.3% lower. The CAC 40 rose 0.1%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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