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EUROPE MARKETS: Europe Stocks Jump After German Ifo Data

02/22/2013 | 07:36am US/Eastern
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By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stocks saw broad-based gains on Friday, as investors moved back into equities in the wake of a two-day selloff after German business-climate data surprised to the upside.

The Stoxx Europe 600 index rallied 1.2% to 288.33, climbing back after a 1.5% drop on Thursday.

Shares of Alcatel-Lucent slipped 0.7%, after the telecom-equipment maker appointed Michel Combes, former head of Vodafone Group PLC's (>> Vodafone Group plc) European operations, as new chief executive. Additionally, HSBC lifted the stock to neutral from underweight.

Shares of Elan Corporation PLC rose 3.3%. The biotech firm said it would buy back $1 billion of its own shares, using money from the sale of its multiple-sclerosis drug Tysabri.

For the broader European stock market, upbeat data out of Germany helped lift the trading mood. The Ifo Business Climate index jumped to 107.4 in February, exceeding expectations of a 104.7 reading.

Investors also trained their attention on generals elections in Italy over the weekend, with worries a new government will fail to follow up on the country's current reformist drive. Several parties have openly campaigned against the austerity measures the nation had to implement in order to meet its EU commitments.

"The market is currently pricing in a rather constructive election outcome, in our view. However, we still see a realistic risk either of a hung parliament, or a potentially difficult and protracted negotiation process as [centre-left candidate Pier Luigi] Bersani and [Prime Minister Mario] Monti seek to form a coalition," analysts at RBC Capital Markets said in a note.

"That leaves us remaining cautious about peripheral exposure in outright terms and in [yield spreads between Italian government bonds and German bunds] in the near term," they said.

Polls aren't allowed in the final weeks leading up to the election in Italy, but polls published before the cutoff date put a center-left coalition led by Bersani in the lead.

Italy's FTSE MIB index posted steep losses this week, on track for a 1.6% weekly loss, but was up 1.4% to 16,230.99 on Friday.

Among other country-specific indexes, France's CAC 40 index added 1.8% to 3,688.10, with banks on the rise. Shares of Société Générale SA rose 2.5% and Credit Agricole SA gained 1.6%.

In Germany, Deutsche Bank AG (>> Deutsche Bank AG) climbed 1.7%. The DAX 30 index traded 1.1% higher at 7,667.07.

And in the U.K., J Sainsbury PLC gained 2.4%, after Citigroup lifted the supermarket retailer to buy from neutral.

Miners were also higher in London, tracking gains for metals prices. Shares of Rio Tinto PLC (>> Rio Tinto plc) added 0.7% and BHP Billiton PLC (>> BHP Billiton Limited) nudged 1% higher.

The FTSE 100 put on 0.8% to 6,343.18.

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