EUROPE MARKETS: European Stocks Rise, With DAX Marching Higher As German Exports Surge

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Deutsche Lufthansa downgraded

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European stocks advanced Monday, with German equities climbing following data that exports from Europe's largest economy have soared.

The Stoxx Europe 600 picked up 0.4% to 381.51, fronted by gains for tech, utility and consumer goods shares.

The pan-European index on Friday fell 0.1%, trimming last week's rise to 0.2%.

Investors pushed German stocks higher Monday, leading the DAX 30 to rise 0.6% to 12,462.70. The index was on track for its largest advance in a week after Germany's Destatis said German exports leapt 14.1% in May ( compared with a year ago in non-adjusted terms, on strong demand from outside the European Union.

"The German economy currently seems to run on all cylinders. Strong domestic demand has already been around for a long while but the former growth engines, industrial production and exports, have also started to gain momentum," wrote ING's Chief Economist Carsten Brzeski.

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On the DAX, chemicals and pharmaceuticals heavyweight Bayer AG (BAYN.XE) rose 0.9%, chemicals producer Merck KGaA (MRK.XE) was lifted by 1% and auto maker BMW AG (BMW.XE) tacked on 0.3%

"Looking ahead, the current upswing of exports should be taken with a pinch salt. Given the high exchange rate sensitivity of German exports to the U.S., the latest appreciation of the euro could leave some marks on the German exports sector in the coming months," Brzeski said. Brexit also remains a risk, and those two factors "can only be offset by a further strengthening of the eurozone economy."

Minutes from the European Central Bank's meeting in June -- released last week -- showed policy makers within a discussion about how to signal increased confidence in the eurozone economy ( about whether to drop a pledge to accelerate its bond-buying program. But policy makers decided not to abandon, in part because of inflation still appeared vulnerable.

A pickup in hawkish tones struck by policy makers from the ECB, the Federal Reserve and the Bank of England have sent bond prices worldwide spiraling lower, sending yields higher. German bund yields last week sprung up to an 18-month high as part of the rout in bond prices.

On Monday, the 10-year bund yield was down 3 basis points at 0.536%.

The euro , meanwhile, traded at $1.1390, down from $1.1403 late Friday in New York. The U.S. dollar extended gains made Friday after strong U.S. jobs data for June kept alive the prospect of the Federal Reserve raising interest rates again this year.

A lower value of the euro can make European exports less expensive for overseas customers to buy.

Stock movers: Deutsche Lufthansa AG (LHA.XE) fell 0.5%, with shares of the airliner downgraded to neutral from buy at UBS. "With the shares roughly at our [price target] and following recent consensus earnings upgrades we believe the shares are up with events," said UBS analyst Jarrod Castle in a research note.

E.On SE was up 2.5%, topping the DAX, following a ratings upgrade to buy from reduce at HSBC for the utility services company, according to Dow Jones Newswires.

Balfour Beatty PLC (BBY.LN) fell 2.4%, falling alongside peer Carillion PLC (CLLN.LN) after the construction and facilities services company warned that first-half operating profit will be lower than expectations. Carillion also said CEO Richard Howson has stepped down. Off the 600, Carillion shares sank 31%.

Indexes: France's CAC 40 picked up 0.2% to 5,157.62, and the U.K's FTSE 100 climbed 0.3% to 7,374.99.

Italy's FTSE MIB rose 0.6% but Spain's IBEX 35 slipped 0.2%.

(END) Dow Jones Newswires

July 10, 2017 06:16 ET (10:16 GMT)