EUROPE MARKETS: European Stocks Close Near 2-year High On Upbeat Factory Data, Greek Bailout Deal

By Carla Mozee, MarketWatch Features Dow Jones Newswires

'Resurgence continues' in France's manufacturing sector, says Markit

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European stocks closed firmly higher on Tuesday, getting a lift after Greece signed a deal to release the next tranche of bailout aid and after data showed eurozone manufacturing output on the rise.

The Stoxx Europe 600 index ended 0.8% higher at 389.53, for its highest close since August 2015.

On Monday, trading in most European markets was closed for the May Day holiday.

"Solid manufacturing PMIs from Europe are offering further succor to the bulls," said Neil Wilson, senior market analyst at ETX Capital, in a note. "Eurozone factory output rose to a six-year high, confirming the recent trend in the manufacturing sector, as laggards Italy and France deliver the goods."

"This ought to provide further assurance to the European Central Bank that the recovery is a little less lumpy than it was. Ongoing central-bank support and a weak euro are certainly helping," he added.

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Greece's green light: The Athex Composite leapt 3.1% at 733.93 after Greece and its international creditors reached an agreement on the austerity measures and economic overhauls (http://www.marketwatch.com/story/greece-and-its-creditors-agree-to-bailout-package-2017-05-02) the Athens government needs to undertake.

The deal should unlock the next disbursement of bailout aid to Greece, which faces around EUR7 billion ($7.63 billion) in debt repayments in July. It should also open the door to discussions about how to ease Greece's massive debt load.

Among Greek bank stocks, Piraeus Bank SA (TPEIR.AT) gained 11%, Eurobank Ergasias (EUROB.AT) moved up 13%, and National Bank of Greece SA (ETE.AT) rose 5.9%.

Greek bond yields fell as prices rose. The 10-year bond yield fell 42 basis points to 5.96%, according to Tradeweb.

Factory activity: A raft of final manufacturing reports for April rolled in. "Resurgence continues" in the French manufacturing sector, Markit said, as it reported the country's purchasing managers index stood at 55.1, compared with 53.3 in March. A reading above 50 signifies expansion.

Germany's PMI of 58.2 in April hovered around the same level as the 71-month high it reached in March. Italy's factory output rose to a more than six-year high of 56.2, and companies were expanding their workforces to meet the higher manufacturing requirements, Markit said.

The euro was higher after the manufacturing data (http://www.marketwatch.com/story/euro-rises-after-greece-agrees-bailout-deal-with-creditors-2017-05-02). It was trading at $1.0908, up from $1.0900 late Monday in New York and close to its highest level in five months.

Individual indexes: After the data releases, the CAC 40 index rose 0.7% to close at to 5,304.15 in Paris, while Germany's DAX 30 index added 0.6% to 12,507.90.

Italy's FTSE MIB rose 0.6% to 20,733.25. Stock investors were getting their first chance to react to Matteo Renzi's win Sunday (http://www.marketwatch.com/story/matteo-renzi-on-track-to-win-italys-democratic-party-election-2017-04-30) in the Democratic Party's primary election. Less than five months ago, Renzi resigned as Italy's prime minister after a failed move to slow the rise of the euroskeptic 5 Star Movement, which he will now lead his party against in the coming general election.

In London, the U.K.'s FTSE 100 index (http://www.marketwatch.com/story/ftse-100-advances-with-bp-rising-manufacturing-report-on-deck-2017-05-02) rose 0.6% to 7,250.05. Markit/CIPS said British manufacturing activity hit a three-year high, with the PMI reading coming in at 57.3.

Stock movers: BP PLC (BP.LN) (BP.LN) rose 1.6% after the oil heavyweight swung to a first-quarter profit of $1.4 billion. (http://www.marketwatch.com/story/bp-swings-to-profit-2017-05-02)

Shares of Just Eat PLC (JE.LN) fell 1.1%. The online food-delivery platform reported a 46% rise in first-quarter revenue (http://www.marketwatch.com/story/just-eat-revenue-rises-46-in-first-quarter-2017-05-02)to 118.9 million pounds ($153.4 million) and reiterated its full-year financial guidance. "We believe this quarter shows JE's ability to further monetize its platform, but believe that market concerns over U.K. competition will linger," said UBS analyst Chris Grundberg in a note.

France in focus:Last week, the pan-European benchmark rose 2.4% (http://www.marketwatch.com/story/european-stocks-drop-for-second-day-ahead-of-top-tier-data-2017-04-28), its best week since December. That weekly advance was kicked off by centrist Emmanuel Macron's win in the first round of the French presidential election, easing fears of a so-called Frexit.

This coming Sunday, Macron and far-right Marine Le Pen will go head-to-head in the final election round.

(END) Dow Jones Newswires

May 02, 2017 12:18 ET (16:18 GMT)