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European Stocks Climb On Speculation of China Stimulus


The Stoxx Europe 600 Index added 0.3 percent to 253.7 at 9:32 a.m. in London. The gauge is heading for a 0.3 percent weekly decline amid mounting concern that slowing economic growth will curb earnings in the U.S. and Europe. The MSCI Asia Pacific Index (MXAP) rose 0.4 percent while Standard & Poor’s 500 Index futures gained 0.2 percent.

The Chinese numbers “are probably the best-case scenario for risk assets, as the print was just weak enough to keep the markets’ anticipation of aggressive easing alive, while it was not too hot to take this notion away from the equation,” Chris Weston, an institutional trader at IG Markets in Melbourne, wrote in an e-mail.

The Stoxx 600 dropped the most in more than two weeks yesterday as Federal Reserve minutes disappointed investors seeking a more definitive signal for further quantitative-easing measures.

China’s growth slowed for a sixth quarter to the weakest pace since the global financial crisis, putting pressure on Premier Wen Jiabao to boost stimulus to secure a second-half economic rebound.

Gross domestic product expanded 7.6 percent last quarter from a year earlier, the National Bureau of Statistics said today. The pace, a three-year low, compares with an 8.1 percent gain in the previous period and the 7.7 percent median forecast of economists. Industrial production increased at a slower pace in June while retail sales growth decelerated.

“With the global economy on an undeniable downward trajectory, today’s initial gains may be short lived as the deeper thoughts on traders’ minds may be the stark question of who is left to buck the trend and provide economic growth,” Jonathan Sudaria, a dealer at Capital Spreads in London, wrote in a note.

Italy today auctions as much as 5.25 billion euros ($6.4 billion) of a new three-year bond and three longer-dated securities. Moody’s Investors Service cut the country’s bond rating and reiterated its negative outlook, as the euro area’s third-biggest economy faces higher funding costs, slower growth, and contagion risk from Greece and Spain.

The ratings company lowered Italy’s rating by two steps to Baa2 from A3 and said further downgrading is possible, according to a statement released in Frankfurt today. That makes Italy’s grade the same as those of Kazakhstan, Bulgaria and Brazil, data compiled by Bloomberg show.

JPMorgan & Chase Co. and Wells Fargo & Co. kick off the second-quarter bank earnings with reports today at about 12 p.m. and 1 p.m. London time, respectively.

Source: Bloomberg