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EUROPE MARKETS: Europe Stocks Climb To Multiyear Highs

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets turned higher Tuesday, taking inspiration from the U.S. where markets climbed after top hedge-fund manager David Tepper said he remains bullish.

Germany's benchmark index extended gains to an all-time closing high, shaking off weaker-than-expected investor-confidence data.
The Stoxx Europe 600 index added 0.4% to 305.66, closing at the highest level since June 2008.

The index has recently defied worries about sluggish growth in large parts of Europe, as cheap liquidity from central banks and relatively lackluster returns in the bond markets lured investors into equities globally.

Most of major country-specific benchmarks have been climbing to multiyear highs, and Frances Hudson, global thematic strategist at Standard Life Investments, said the rally is poised to continue.

"Unless we get something really disturbing markets will go higher," she said. "We're at the end of the earnings season and the news driver moves from the corporate sector to be focused more on the political and economic arena. It's a bit more risky, but there aren't any major political upsets at the moment."

Among upbeat company news on Tuesday, shares of Severn Trent PLC soared 14% after the water-utility firm said it received a "very early stage" bid approach, although no proposal has been made.
Deutsche Post AG gained 3.9% after the company reported a rise in first-quarter adjusted profit of more than 45%.

Tepper pep talk

The broader European stock markets erased earlier losses after U.S. markets showed positive moves, after Tepper told CNBC that he's "definitely bullish" on stocks and that "every place is the place to be in stock markets around the world."

"So, today's afternoon reversal clearly suggests markets are getting comfortable with the view that although Fed stimulus measures will have to come an end at some point, with a backdrop of a recovering U.S. economy, perhaps withdrawal from the stimulus pills won't be as crippling as some had previously thought," said Ishaq Siddiqi, market strategist at ETX Capital in a note.

Last week, The Wall Street Journal reported that the U.S. Federal Reserve is mapping out a strategy for exiting its easing program, although the timing remains uncertain.

Most indexes in Europe traded in negative territory in the beginning of the session, as investors were looking at economic data in Germany. The ZEW economic sentiment indicator, a gauge of investor confidence, inched 0.1 point higher to 36.4 in May, but still well below the 40 print expected by analysts. The reading comes after the index slumped to 36.3 in April, stoking worries about Germany's economic performance and the country's ability to pull the rest of Europe of sluggish growth.

The data contrasted reports out last week, when German trade data and industrial-production figures beat market expectations and fueled hopes the economy is picking up after a soft patch earlier in the year.

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