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

Deutsche Lufthansa downgraded

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

The Stoxx Europe 600 rose 0.4% to close at 381.64, led by gains for tech, utility and basic materials 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 0.5% to end at 12,445.92. The gain, the index's biggest in a week, came after Germany's statistics office 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.

On the DAX, chemicals giant Linde AG (LIN.XE) rose 2%, auto parts maker Continental AG (CON.XE) climbed 1.4% and auto maker BMW AG (BMW.XE) tacked on 0.3%

"Looking ahead, the current upswing of exports should be taken with a pinch of 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," he said.

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 the language, in part because inflation still appeared vulnerable to weakening.

A pickup in hawkish tones struck by policy makers from the ECB, the Federal Reserve and the Bank of England have sent bond prices world-wide 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 0.538%.

The euro , meanwhile, traded at $1.1396, 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 0.4%, 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 ended up 2.2%, 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) dropped 3.2%, 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 39%.

Schroders PLC (SDR.LN) tacked on 2.2% after RBC analysts upgraded the stock to outperform from underperform ahead of an earnings release on July 27.

Indexes: France's CAC 40 picked up 0.4% to 5,165.64, and the U.K's FTSE 100 climbed 0.3% to 7,370.03.

Italy's FTSE MIB rose 0.8% and Spain's IBEX 35 added 0.2%.

(END) Dow Jones Newswires

July 10, 2017 12:01 ET (16:01 GMT)