European stocks rally on bright World Bank outlook

January 15, 2014
The World Bank raised its growth forecasts for the global economy, but warned of potential volatility in capital flows as the United States withdraws its stimulus/AFP
The World Bank raised its growth forecasts for the global economy, but warned of potential volatility in capital flows as the United States withdraws its stimulus/AFP

, LONDON, January 15 – European stocks rose on Wednesday as the World Bank declared the global economy was at a turning point, while the luxury goods sector was boosted by sparkling results from Burberry.

Sentiment was also bolstered by German economic growth data and positive US retail sales numbers.

London’s FTSE 100 index of top companies added 0.35 percent to stand at 6,790.43 points and in Paris the CAC 40 won 0.58 percent to 4,299.12 nearing midday deals.

Frankfurt’s DAX 30 index rallied 1.07 percent to 9,642.84 points, compared with Tuesday’s closing values.

The World Bank declared on Wednesday that the global economy was “finally turning the corner five years after the global financial crisis”, and hiked its latest economic growth forecasts.

Global economic growth was estimated to hit 3.2 percent this year, accelerating from a 2.4 percent annual pace in 2013.

“In mid-morning trading the FTSE 100 is up … after the World Bank commented that the global economy is at a turning point,” said analyst David Madden at traders IG.

“Equity markets welcomed the international financial organisation’s outlook for 2014.”

In a further boost, official data showed on Wednesday that the German economy — Europe’s biggest –grew by 0.4 percent in 2013.

Nevertheless, that marked a slowdown from 0.7-percent expansion in 2012, and was the weakest growth rate for four years.

“Strong German GDP figures gave the Frankfurt market fuel to surge ahead of its European counterparts,” added Madden.

European investors meanwhile welcomed Burberry’s latest quarterly results, which gave a shot in the arm to the luxury goods sector.

Sales of Burberry’s luxury handbags and clothing soared over the crucial festive trading period, boosted by impressive growth in Asia, the British fashion group revealed on Wednesday.

Retail revenues jumped 14 percent to £528 million ($866 million, 635 million euros) in the company’s third quarter or the three months to December 31, compared with a year earlier, Burberry said in a results statement.

Comparable sales from stores open at least a year increased by 12 percent — with double-digit growth in the Asia Pacific region.

In reaction, Burberry surged to the top of the FTSE 100 index, gaining 4.83 percent to 1,540 pence.

Across in Paris, French luxury goods group LVMH saw its share price jump by 1.31 percent to stand at 127.9 euros.

Asian equities mostly rose on Wednesday, following overnight gains on Wall Street, after a surprisingly strong batch of retail data out of the United States eased concerns about the world’s number one economy.

“The solid US number soothed investors’ concern on the economy caused by the disappointing jobs report last Friday,” said Credit Agricole analysts in a note to clients.

In foreign exchange trading, the euro edged down to $1.3625 from $1.3677 late on Tuesday in New York.

The European single currency fell to 82.98 British pence from 83.19 pence Tuesday. The pound dipped to 1.6420 from $1.6438.

Gold prices slipped to $1,237.58 an ounce from $1,251.50 on Tuesday on the London Bullion Market.

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