EUROPE MARKETS: European Stocks Rebound From 6-month Low As Traders Shrug Off North Korea Fears

By Sara Sjolin, MarketWatch Features Dow Jones Newswires

German inflation rises more than expected

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European stocks rebounded from a six-month low on Wednesday, as tensions after North Korea's latest missile launch eased for now and spurred investors to take on more risk.

The Stoxx Europe 600 index rose 0.7% to close at 371.01, after sliding 1% to settle at its lowest level since Feb. 10 on Tuesday. That drop came after North Korea launched a ballistic missile (http://www.marketwatch.com/story/north-koreas-outrageous-missile-launch-over-japan-inflames-tensions-again-2017-08-29) over Japan, in a move seen as another direct provocation from Pyongyang meant to destabilize the Asian region.

Stocks, however, managed to shake off the concerns (http://www.marketwatch.com/story/dow-futures-stumble-more-than-100-points-as-north-korea-tensions-flare-up-again-2017-08-29) on Wednesday, with Asian markets scoring firm gains (http://www.marketwatch.com/story/asian-markets-rebound-shrugging-off-north-korea-tensions-2017-08-29), U.S. stocks trading higher (http://www.marketwatch.com/story/sp-500-aims-for-4th-up-session-in-a-row-as-traders-wait-for-gdp-report-2017-08-30) and European stocks closing higher across the board.

"Financial markets' concerns about North Korea's missile shot have faded rapidly. People are naturally programed to be optimistic, so the reaction is not that surprising," said Paul Donovan, global chief economist at UBS Wealth Management, in a note.

"The market reaction is similar to those in the 1990s when missile tests were common, although the U.S. does have a president of a different temperament today," he said.

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Read:Dow industrials just booked the best intraday comeback in 9 months (http://www.marketwatch.com/story/dow-just-booked-its-best-intraday-comeback-in-9-months-2017-08-29)

And see:How North Korea and Harvey rattled markets, in 4 charts (http://www.marketwatch.com/story/how-north-koreas-latest-offensive-harvey-carnage-and-low-volumes-rattle-stock-market-2017-08-29)

Analysts also said measured and balanced responses to the missile test from U.S. President Donald Trump and other global leaders helped to calm fears about a possible escalation in the conflict.

Stock movers: BioMerieux SA (BIM.FR) rallied 8% to the top of the Stoxx 600 after the French biotech company lifted its 2017 sales guidance.

Baloise Holding AG (BALN.EB) rose 1.3% after the Swiss insurer said first-half profit soared 34%.

Telenor ASA (TEL.OS) climbed 1.7% after the Norwegian telecom company announced plans for a buy-back program.

Economic news: German inflation rose more than expected in August (http://www.marketwatch.com/story/german-inflation-jumps-to-18-beats-forecast-2017-08-30), coming in at a 1.8% annual rate, up from 1.5% in July, measured by harmonized European Union standards. Economists had expected an increase to 1.7%.

"For the ECB, today's German inflation data is good news, as it increases the likelihood that August inflation for the entire eurozone (to be released tomorrow) will also show a small pick-up," said Carsten Brzeski, chief economist for ING in Germany and Austria.

"However, German inflation data will do little to hush the current discussion on the possible impact of the stronger euro on the ECB's tapering plans and the eurozone in general," he added.

European Central Bank officials have expressed concerns about the euro "overshooting" other currencies after its 13% rally against the dollar this year, fearing it could weigh on inflation, which remains below the bank's target of near but just below 2%.

The euro traded at $1.1925 compared with $1.1974 late Tuesday in New York. The shared currency extended losses as the dollar rose after data showed U.S. gross domestic product expanded by more than forecast in the second quarter and the ADP report showed 237,000 private-sector jobs were added in August.

In other European data on Wednesday, inflation in Spain rose to 2% in August, up from 1.7% in July and higher than the 1.8% forecast.

Economic sentiment in the eurozone rose to 111.9 in August from 111.3 in July, marking its highest level in more than 10 years (https://ec.europa.eu/info/sites/info/files/esi_2017_08_en.pdf). Consumer confidence, meanwhile, climbed to minus 1.5 in August from minus 1.7 in July.

Indexes: Germany's DAX 30 index climbed 0.5% to end at 12,002.47, breaking a three-session losing streak.

France's CAC 40 index gained 0.5% to 5,056.34, while the U.K.'s FTSE 100 index added 0.4% (http://www.marketwatch.com/story/ftse-100-bounces-back-from-1-week-low-as-north-korea-fears-ease-2017-08-30) to 7,365.26.

(END) Dow Jones Newswires

August 30, 2017 12:27 ET (16:27 GMT)