EUROPE MARKETS: European Investors Cheer German Consumer Data

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets climbed on Wednesday after upbeat German consumer-confidence data and better-than-expected economic reports from the U.S.

The Stoxx Europe 600 index rose 0.6% to 324.30, after closing at the lowest level in almost two weeks on Tuesday.

"Equity markets are without any doubt in a Santa rally mood, and there is still more potential for an upward move by the end of this year. However, we may see some profit-taking ahead of next week's U.S. employment data, which could flare up the tapering talk," said Naeem Aslam, chief market analyst at AvaTrade. Tapering refers to the expected scaling back in the Federal Reserve's $85 billion a month bond-buying program.

Data from Germany showed consumer confidence rose to the highest level in more than six years, buoyed by a robust jobs market and solid income expectations. The forward-looking GfK consumer-confidence indicator for December came in at 7.4, up from 7.1 in November and beating analyst expectations.

Also in Germany, the biggest political parties early Wednesday agreed to forge a coalition government led by Angela Merkel.

Merkel's conservative Christian Democratic Union, its Bavarian Christian Social Union sister party and the Social Democrats agreed after 17 hours of negotiations to introduce a national minimum wage and toughen labor-market rules, as well as boost spending on pensions, education and infrastructure.

Data in the U.K. confirmed that the economy grew 0.8% in the third quarter, driven by the fastest rise in household spending in more than three years.

In the U.S., stocks opened higher after data showed jobless claims last week unexpectedly fell, while durable-goods orders fell less than forecast.

Europe movers

The German DAX 30 index rose 0.7% to 9,350.68, putting it on track for an all-time closing high.

France's CAC 40 index gained 0.4% to 4,294.92,and the U.K.'s FTSE 100 index added 0.3% to 6,655.88.

Among notable movers in the indexes, Colruyt SA jumped 5.9% in Brussels after the food retailer reported a 9% rise in first-half earnings per share.

Shares of United Utilities Group PLC rose 0.5% in London after the water supplier raised dividends 5%, as higher prices boosted revenue and profit.

Compass Group PLC gained 1.7% after the catering firm said it will return 500 million pounds ($810 million) to shareholders via a buyback program, as it reported a rise in full-year sales.

HeidelbergCement AG climbed 2% in Frankfurt after Berenberg lifted the firm to buy from hold.

Shares of Veolia Environnement SA dropped 2.4% after Electricite de France SA late Tuesday sold its stake in utility and waste management firm. EDF shares were 0.4% higher.

Shares of Accor SA lost 6.7% after the hotel operator laid out a new growth strategy.

De La Rue PLC gave up 6.8% after Citigroup cut the currency printer to neutral from buy. The company rallied 9.4% on Tuesday after reporting a 19% rise in first-half pretax profit.

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