MARKET COMMENT: Europe Stocks Rise After Chinese, U.S. Data

By Sara Sjolin

LONDON (MarketWatch)--European stock markets gained ground Monday, with banks and drug makers in the lead, as investors digested a raft of data out of China and the U.S., including better-than-expected U.S. retail sales.

The Stoxx Europe 600 index rose 0.5% to close at 270.80, climbing back from a 0.5% loss Friday.

"The U.S. retail sales have been a factor to cheer the markets," said Keith Bowman, equity analyst at Hargreaves Lansdown.

"We've still got the elections coming up next month, so we have a question mark hanging. But there has been a reasonable amount of data lately that have been encouraging and that's a positive. And let's not forget that the [U.S. Federal Reserve] is still there in the background with its unlimited [quantitative easing] program," he said.

Drug makers helped lift the index, with Roche Holding AG up 0.8%. The health-care major's Genentech subsidiary said late Friday that the U.S. Food and Drug Administration had approved an expanded use for Actemra, a drug that treats adults with rheumatoid arthritis.

France's Sanofi SA rose 1.2% and Denmark's Novo Nordisk AS gained 2.2%.

Norwegian consumer-goods firm Orkla ASA rallied 3.4% on news it has agreed to form a joint venture with aluminum producer Norsk Hydro ASA, which gained 0.1%.

Elsewhere, investors were looking at a fresh batch of data out of China over the weekend. The country's trade surplus widened in September, with exports jumping 9.9%, easing worries about global consumer demand. The reading beat analysts' expectations of a 5% rise.

"While the trade data for September was encouraging, it is important to remember that the foreign-trade data are notoriously volatile and for that reason we should be careful to draw conclusions on a single month's data," analysts at Danske Bank said in a note.

"We still expect exports to remain relatively soft in Q4, but recent data suggest that weak exports in Q4 will weigh less on growth than it did in Q3," they said.

Monday, a release showed Chinese consumer prices rose 1.9% in September, leaving expectations high that Beijing will maintain an accommodative policy stance.

Attention now turns to the closely watched third-quarter gross domestic product release Thursday.

Data releases were further in focus in the U.S., where retail sales for September rose a better-than-expected 1.1%.

In addition, the Empire state index showed business conditions continued to deteriorate in October for a third straight month in the New York region.

"The good news generally seems to be associated with the consumer, but business--especially manufacturing--seems to be in the midst of a steepening downturn," said Chris Williamson, chief economist at Markit, in a note.

"While the consumer may therefore help boost GDP in the third quarter, the gain is likely to be offset to some extent by weak production," he added.

U.S. stocks traded higher on Wall Street.

Spain also made its way to the headlines, after Reuters reported that the country may formally ask for a bailout in November. Analysts said expectations are fading for Madrid to request a bailout ahead of a summit meeting of European leaders later this week.

The IBEX 35 index rose 0.3% to 7,678.50.

Among notable movers in Europe, fashion retailer Hennes & Mauritz AB gained 2% after it said total sales rose 15% in September compared with a year earlier.

Oil group Total SA gained 1% in Paris, as it restated certain financial data tied to the reorganization of its upstream business as well as its supply and marketing activities.

Vivendi SA picked up 2.8%, after French weekly paper Journal du Dimanche reported Sunday that the media conglomerate is in talks to merge its mobile unit SFR with French cable provider Numericable. A representative from Vivendi declined to comment, while Numericable was unavailable.

The CAC 40 index jumped 0.9% to 3,420.28, further lifted by banks.

Credit Agricole SA added 1.8%, Societe Generale SA rose 1.5% and BNP Paribas SA gained 1.4%.

In the U.K., banks were also on the rise. Barclays PLC added 2%, Lloyds Banking Group PLC picked up 1.6% and HSBC Holdings PLC gained 0.8%.

The FTSE 100 index added 0.2% to 5,805.61.

Miners, however, added pressure in London, tracking metals prices lower.

Rio Tinto PLC slipped 1.6% after Goldman Sachs cut the stock to neutral from buy, while Anglo American PLC fell 2%, as the bank initiated coverage of the stock with a sell rating.

Among German shares, Commerzbank AG picked up 1.4% and Deutsche Bank AG gained 1%.

The DAX 30 index rose 0.4% to 7,261.25.

Outside the main index in Frankfurt, perfume and jewelry retailer Douglas Holding AG rallied 8.1% after Advent International Corp. placed a voluntary takeover offer for its shares, valuing the company at 1.5 billion euros ($1.94 billion).

Write to Sara Sjolin at [e-mail]