Global Stocks Lifted by Robust Economic Data -- 4th Update

By Mike Bird and Kenan Machado Features Dow Jones Newswires

European stocks rose Thursday as economic data from China, the U.S. and the eurozone came in stronger than expected.

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The Stoxx Europe 600 rose 0.8% in late morning trading, with British, German and French stocks all rising by similar amounts.

U.S. equity futures rose too, with the S&P 500 up 0.2% and the Dow Jones Industrial Average up 0.3% ahead of the open in New York.

Eurozone inflation data released Thursday came in above expectations, with consumer prices rising 1.5% in August. Core inflation, a measure which strips of volatile items like food and fuel, held steady to 1.2%, the joint-highest level since 2013.

"We expect the uptrend in core inflation to continue in coming months, even without wage growth improvements, as GDP growth should remain above trend," said analysts at Citigroup after the release.

Core inflation is still below the European Central Bank's target of close to, but below, 2% price growth. The eurozone unemployment rate held steady at 9.1% in July.

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"Everyone's used to writing gloomy stories about Europe, but you're starting to get a nicely aligned, coordinated economic upswing," said Stewart Robertson, senior economist at Aviva Investors.

"There's been a great deal more political harmony than anyone had really expected at the start of the year," he said. "But inflation is still struggling to come back."

A major Chinese business survey helped to spur a 1.8% rise in the Stoxx 600's basic resources sector, with the August manufacturing purchasing manager's index above expectations at 51.7. Any figure above 50 indicates that the industry surveyed is growing is growing.

In Asia, the Nikkei Stock Average closed up 0.7%, after weakening in 14 of the past 19 trading sessions, leaving the index down for August.

Many other markets in the region are poised to emerge from a volatile summer largely unscathed, with double-digit gains for the year.

In China, the Shenzhen A Share index closed up 0.3%, while Hong Kong's Hang Seng ended the day down 0.4%

"The summer break sees investors returning to markets not looking much different from when they left," wrote Mark Tinker, head of AXA IM Framlington Equities Asia. Markets witnessed bouts of selling in August over tensions between North Korea and the U.S., though shares mostly recovered within a short span.

On Thursday, gains for the U.S. dollar drove Japanese equities as the greenback recouped some losses made earlier in the week, after the U.S. reported its fastest pace of economic growth in more than two years. The economy in the second quarter grew 3% compared with the same period a year ago, beating market expectations.

In foreign-exchange markets, the WSJ Dollar Index ticked slightly higher, up 0.2% after rising 0.43% Wednesday. Against the yen, the greenback rose 0.3%, back above 110. The euro dipped slightly against the dollar, falling by 0.3% to $1.184.

The euro's recent strength led to an end-2017 forecast upgrade from Bank of America Merrill Lynch this week, from $1.08 to $1.15. Some analysts see the common currency rising even further than its current levels.

"We see the risks as still skewed toward the euro overshooting above 1.20 at some point this year rather than permanently reversing lower," said Deutsche Bank strategist George Saravelos in a note to clients published Thursday.

Write to Mike Bird at Mike.Bird@wsj.com and Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

August 31, 2017 06:55 ET (10:55 GMT)