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EUROPE MARKETS: French Stocks Push To 2-week High As Data Show Business Booming

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11/23/2017 | 02:59pm CEST

By Carla Mozee, MarketWatch

European stocks choppy; German political crisis in focus

European stocks largely struggled to find firm direction Thursday, but French blue-chip shares climbed after data showed the country led the strengthening in the eurozone economy this month.

How key gauges are moving: The Stoxx Europe 600 was up less than 1 point at 387.14 in what's been a topsy-turvy session for European equities. The index has risen as much as 0.2% and has lost as much as 0.6% intraday. The financial and utilities sectors were in the red, but industrial and technology shares led advancers.

Trading volumes are expected to be thin, as U.S. markets are closed for the Thanksgiving Day holiday. On Wednesday, the Stoxx 600 fell 0.3% , snapping a two-day run of gains.

In Paris, the CAC 40 sloughed off losses and rose 0.6% to 5,383.04.

In Frankfurt, the DAX 30 index has moved between gains and losses and recently shed 0.1% to 12,996.31.

In Madrid, the IBEX 35 picked up 0.6% to 10,070.60 while in London, the FTSE 100 index fell 0.1% to 7,409.95, but traded up from its session low.

The euro bought $1.1846, up from $1.1824 late Wednesday in New York.

What's driving markets: The main stock benchmarks pared losses or turned higher as the session wore on, after upbeat economic data, including a preliminary report on eurozone services and manufacturing activity that beat forecasts .

The composite Purchasing Managers Index for November rose to 57.5, its highest level since April 2011, said data firm IHS Markit. Economists widely expected an unchanged reading. France led the way, with a surprise jump in its services sector PMI to 60.2, compared with an expected fall to 57.0.

One headwind to stocks is a rise in the euro, which has been gaining since the U.S. dollar was yanked down Wednesday by investors concerned about the pace of U.S. interest-rate hikes . The upbeat economic data may also be giving a lift to the shared currency, analysts said.

A stronger euro can put pressure on shares of exporters as it makes products more expensive for holders of other currencies.

Attention was turning to the political turmoil in Germany, even as fresh figures showed the country's economy expanded in the three months to September. Pressure is growing on Martin Schulz, the leader of Germany's Social Democrats, to think again about a refusal to revive the "Grand Coalition" with Chancellor Angela Merkel's Christian Democrats.

The country has been thrown into political turmoil after this weekend's breakdown in talks to form a different, three-party, coalition government that would keep Merkel at the helm. Schulz is scheduled to meet the German president for discussions.

What strategists are saying: Traders "are keeping an eye on the outcome of the meeting between [German] President Steinmeier and SPD leader Schulz," said Naeem Aslam, chief market analyst at Think Markets, in a note.

"German party leaders do feel that they have a responsibility to form a government and the SPD leader has said that he is open for another round of talks with Merkel," Aslam said. "If we do see more tangible progress which helps Merkel to finally form a coalition, we do think that the euro could move higher and the EUR/GBP could surpass the mark of GBP0.90."

"In the short term, the impact from the current political impasse on the German economy should be (close to) zero. For the longer term, however, given the lack of structural reforms and the urgent need for investments in digitalization and education, German politicians should not waste too much time if they don't want to put the economy's future at risk," said Carsten Brzeski, chief economist at ING, in a note.

Stock movers: Centrica PLC shares (>> Centrica) plunged 15% to the bottom of the Stoxx 600, after the parent company of British Gas warned that its energy supply businesses have had a disappointing second half . It also gave a full-year adjusted earnings outlook that was below the market consensus.

Thyssenkrupp AG (>> ThyssenKrupp) rose 2% as the German conglomerate's fiscal 2017 adjusted earnings before interest and taxes rose 30% to EUR1.91 billion, exceeding a FactSet consensus forecast of EUR1.74 billion.

Altice NV shares (>> Altice) jumped 5.8% following a Financial Times report that the French telecommunications company is seeking to sell its telecom network in the Dominican Republic.

Remy Cointreau SA (>> Rémy Cointreau) fell 3.3% even as the company said first-half net profit rose to EUR89.2 million ($105 million) on stronger sales of its Remy Martin cognac .

Economic data: Germany's gross domestic product grew at a quarter-to-quarter rate of 0.8% in the three months through September, or 3.3% in annualized terms, the Destatis statistics agency said Thursday, confirming preliminary growth estimates.

France's statistics bureau Insee said its monthly measure of manufacturing confidence rose one point to 112 in November , in line with economists' expectations as well as setting a fresh decade high.

Stocks mentioned in the article : Centrica, ThyssenKrupp, Rémy Cointreau, Altice
Stocks mentioned in the article
ChangeLast1st jan.
CAC 40 -0.11% 5542.55 Real-time Quote.4.44%
DAX 0.65% 12938.01 Delayed Quote.0.46%
EURO / BRITISH POUND (EUR/GBP) 0.10% 0.87909 Delayed Quote.-1.40%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.-5.90%
IBEX 35 -1.70% 9826.5 End-of-day quote.-2.16%
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