European Shares Edge Up as German Economy Shows Strength -- Update

By Riva Gold and Lucy Craymer Features Dow Jones Newswires

European stocks inched higher Friday despite declines on Wall Street and in Asia as data showed Germany's economy outpaced the U.S. at the start of the year.

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The Stoxx Europe 600 was up 0.1% in morning trading after data showed Europe's largest economy grew at a quarterly clip of 0.6% in the first quarter of 2017, surpassing growth in the U.S., U.K., Japan, France, and Italy.

"People are kind of gravitating toward Europe, because for now, all of a sudden Europe has economic growth," said Jimmy Chang, chief investment strategist at Rockefeller & Co.

European stocks are close to two-year highs as political jitters have given way to increasing signs of an improving economy and corporate earnings.

Investors have poured money into the region's equities in recent weeks, with a record inflow of $6.1 billion into European equities since centrist Emmanuel Macron won the French election, according to Bank of America Merrill Lynch.

On Friday, shares of Vivendi SA climbed 5.6% after the company offered to buy a EUR2.36 billion ($2.56 billion) stake in advertising group Havas SA. Gains were capped, however, as steel giant ArcelorMittal fell 4.6% after reporting first quarter results and amid losses in U.S. and Asian markets.

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Futures pointed to a 0.2% opening decline for the S&P 500, as investors digested a fresh round of corporate results. Shares of Nordstrom, Inc. were lower in premarket trading after the retailer reported an unexpected fall in same-store sales and overall revenue rose less than expected.

U.S. stocks had edged lower from record levels Thursday as disappointing earnings news weighed on shares of retailers and technology companies.

Still, the overall earnings picture in the U.S. has been supportive of markets this quarter, with earnings per share growth reaching its highest rate since 2011, according to CFRA Research.

Later Friday, investors will be watching to see if U.S. retail sales can rebound from a fall in the last two months to match signs of consumer optimism and a strong labor market.

Earlier, stock markets were broadly lower in Asian trading hours, tracking weakness in Europe and the U.S. on Thursday. Japan's Nikkei Stock Average fell 0.4% Friday as the yen strengthened modestly against the dollar, making the country's exports less competitive, while shares of financials also pulled back.

South Korea's Kospi was off 0.4% after reaching a record high, while Australia's S&P/ASX 200 declined 0.7% amid declines in the tech sector.

Hong Kong's Hang Seng Index was up 0.1% while the Shanghai Composite rose 0.6%, led by gains in insurance, aviation and automotive shares.

Analysts also pointed to some encouragement around China's equities after the Trump administration said it had agreed with Beijing on a broad range of measures aimed at improving the access of American beef producers, electronic-payments providers and natural-gas exporters to the world's second-largest economy.

In commodities, Brent crude oil was down 0.1% at $50.73 a barrel, while copper futures advanced 0.4% to $5,563 a ton while gold inched up 0.3% to $1,228 an ounce.

10-year U.S. Treasury yields edged down to 2.376% from 2.400% Thursday, while German bund yields fell to 0.414% from 0.428%. Yields move inversely to prices.

Jacob M. Schlesinger and Nina Adam contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Lucy Craymer at Lucy.Craymer@wsj.com

(END) Dow Jones Newswires

May 12, 2017 05:23 ET (09:23 GMT)