GLOBAL MARKETS: European Stocks Perk Up Ahead Of Econ Data

LONDON -- European stock markets were marginally higher Wednesday, benefiting from a late recovery in Asian markets on strong Australian retail sales, as investors bought back into the market following Tuesday's decline.

"Any weakness still seems well supported and while the next few weeks and months may not offer the fireworks we’ve had in the market recently, it seems that shares are still well placed to grind at least a little higher from their current levels," said David Jones, chief market strategist at IG Index.

At 0817 GMT, Stoxx 600 index was up 0.4% at 244.75, London's FTSE 100 index up 0.2% at 5169.36, Frankfurt's DAX index 0.2% higher at 5725.17, and the CAC-40 index in Paris up 0.4% at 3830.02.

Still, markets are seeking some fresh impetus for a concerted move in either direction, noted traders. "We are treading water at the minute, with investors appearing to be happy with the profits that have been banked thus far," said John Murphy, an analyst at ODL Securities.

Wednesday's raft of scheduled economic data during the session may well offer the market this direction. Investors will closely look at the euro-zone harmonized index of consumer prices at 0900 GMT, the U.S. Automatic Data Processing payroll survey at 1215 GMT, and the U.S. GDP figure at 1230 GMT.

"I would expect volumes to pick up later in the afternoon once U.S. GDP figures are published. Markets will be cautiously awaiting the figures given yesterday's weaker than expected U.S. consumer confidence numbers," said Arifa Sheikh-Usmani, equity trader at Spreadex.

On the stocks front, mining stocks recovered from Tuesday's losses, offering equities much needed support as commodity prices recovered from Tuesday's losses while the dollar weakened.

"After years of underperformance, mining shares outperformed the overall equity market from 2000 to mid-2007. We believe that over the longer term the secular trend outperformance of mining shares that began in 2000 will continue, driven by growth in the developing world," said H. Fraser Philips, analyst at RBC Capital Markets.

Shares in Xstrata PLC (XTA.LN) gained 1.2%, while Rio Tinto PLC (RIO.LN) added 0.4%. The pan-European Dow Jones Stoxx 600 basic resources index tacked on 0.7%.

Meanwhile, industrial conglomerate Smiths Group PLC (SMIN.LN) posted a 2% decline in full-year pretax profit due to weaker underlying sales, and said in the year ahead it would focus on delivering further cost savings and improving cash flow. Still, analysts applauded the management's increase in targeted cost savings to GBP50 million annually by 2011 from GBP47 million. Shares in Smiths Group gained 5.8%.

On Wall Street Tuesday, stocks closed lower on the disappointing reading for consumer confidence. The Industrial Average closed down 47.16 points, or 0.5%, to 9742.20, marking its fourth fall in five sessions, while the Standard & Poor's 500 lost 2.37, or 0.2%, to 1060.61. Going into the last day of September, the index remains up 3.9% for the month.

The negative tone on Wall Street put Asian stock markets under pressure earlier Wednesday, but a rise in Australian retail sales offset the weakness across the region and markets moved off their earlier lows as investor appetite for risk rose. Japan's Nikkei 225 closed up 0.3% but South Korea's Kospi Composite was off 1.0%. Hong Kong's Hang Seng Index was 0.2% lower but the Shanghai Composite was up 0.9%.

End-of-quarter window dressing may have helped some regional markets, traders said, even after the weaker-than-expected U.S. consumer confidence data. "Funds don't want to have too much cash on their books before the end of quarter," said Patersons client adviser Chris Blair in Sydney.

In the currency markets, the dollar fell back below the Y90 mark, weighed down by exporters' sales, while the euro was also lower against the yen but up against the dollar. Dealers said the dollar and the euro were supported by month-end demand from Japanese importers for account settlement, while some players were taking profit on the yen after its recent steep rise.

At 0840 GMT, the dollar was trading at Y89.46, down from Y90.09 late in New York Tuesday, while the euro was fetching Y130.76, down from Y131.38. The euro was slightly higher against the dollar at $1.4620, up from $1.4588.

Elsewhere, spot gold was at $998.15 per troy ounce, up around $7 from the New York close, while in the oil market the Nymex November crude oil futures contract was up 40 cents at $67.11 per barrel.

European government bonds were marginally weaker Wednesday, ahead of the European Central Bank's 12-month long-term refinancing operation.

Analysts at WestLB expect demand to reach EUR150 billion, below the EUR442 billion allocated at the previous tender on June 24. The results are due around 0920 GMT.