LONDON (AP) — Better-than-anticipated economic figures out of the U.S. and Germany helped shore up markets Tuesday but did little to dislodge hopes of further stimulus measures from the world's leading central banks.
Investors breathed a sigh of relief on the news that Germany, Europe's biggest economy, posted 0.3 percent growth in the second quarter. The consensus in the markets was for a lower figure, with some analysts predicting a flat reading.
In Europe, Germany's DAX was up 0.9 percent at 6,974 while the CAC-40 in France rose 0.7 percent to 3,450. The FTSE 100 index of leading British shares was 0.56 percent higher at 5,864.
The euro also remained fairly steady, trading 0.03 percent higher at $1.2327. Around a month ago, Europe's single currency appeared headed to fall below its two-year low of $1.18.
The positive tone in markets continued into the U.S. trading, which was helped by news that U.S. retail sales rose by a surprisingly big 0.8 percent in July. The rise was far greater than anticipated and marked the first increase since March. Retail sales are particularly important because they account for around 70 percent of the U.S. economy.
"Markets embraced positive data from the U.S.," said Shavaz Dhalla, a trader at Spreadex. "Coupled with earlier data showing Germany's GDP higher than expected provided a solid ground for optimism today."
In the U.S., the Dow Jones industrial average was up 0.3 percent at 13,186 while the broader S&P 500 index rose the same rate to 1,408.
Over the past few weeks, stocks, as well as the euro and the price of oil, have rallied on hopes the world's major central banks will do more to shore up the global economy.
While the U.S. Federal Reserve and the Chinese monetary authorities are expected to ease monetary policy further, the European Central Bank is widely-tipped to play a more crucial role in Europe's debt crisis resolution efforts.
Another interest rate reduction from the ECB is also expected. Germany's surprise growth in the second quarter was not enough to prevent the 17-country eurozone economy from contracting 0.2 percent in the period. It's not yet in recession as output was flat in the first quarter — a recession is officially declared after two straight quarters of falling output.
"For now investors continue to put their faith in the actions of central bankers," said David Morrison, senior market strategist at GFT Markets.
Earlier in Asia, Japan's Nikkei 225 rose 0.5 percent to close at 8,929.88, while Hong Kong's Hang Seng added 1.1 percent to 20,291.68. South Korea's Kospi rose 1.3 percent to 1,956.96. On mainland China, the Shanghai Composite Index gained 0.3 percent to 2,142.53. while the smaller Shenzhen Composite Index gained 0.7 percent to 893.80.
Oil prices tracked equities higher, and the benchmark New York rate rose 47 cents to $93.19 per barrel in electronic trading on the New York Mercantile Exchange.