GLOBAL MARKETS-Corporate news lifts stocks, tight money markets buoy euro

Tue Apr 29, 2014 4:21am EDT

By Jamie McGeever
    LONDON, April 29 (Reuters) - European stocks rose on
Tuesday, as optimism surrounding corporate earnings and merger
moves eclipsed the crisis in Ukraine, while rising euro zone
money market rates and strong German consumer confidence
supported the euro.
    Sterling also rose as investors awaited what are expected to
be strong first quarter UK economic growth figures, a view
backed by comments on Tuesday from Bank of England governor Mark
Carney that the recovery was starting to broaden out.
 
    Stock markets shrugged off a mixed session in Asia and
remarks made by European Central Bank president Mario Draghi to
German lawmakers that further monetary easing in the form of
bond-buying remains some way off.
    But pressure on the ECB to act is mounting. Overnight money
market rates rose to their highs of the year as excess cash in
the financial system continued to fall thanks to banks paying
down cheap ECB loans taken out at the height of the crisis.
    "Money market developments are putting more pressure on the
ECB. If rates don't come down, the ECB is bound to do
something," said Jan von Gerich, chief fixed income strategist
at Nordea in Helsinki.
    Overnight money rates in the euro zone nudged 0.4 percent,
well above the ECB's benchmark interest rate of 0.25 percent.
This helped push the euro up 0.2 percent on the day to $1.3878
. 
    Sterling also rose 0.2 percent against the dollar to $1.6840
 
    Draghi and other ECB officials have expressed concern in
recent weeks at the deflationary impact of a strong exchange
rate. 
    German inflation data later on Tuesday is expected to show
an increase in April, ahead of euro zone figures tomorrow which
are expected to rise to a still-low 0.8 percent from a
multi-year trough of 0.5 percent.
    Equities drew support from the GfK index of German consumer
confidence holding at a multi-year high of 8.5 heading into May,
as well as earnings reports from Finnish telecom giant Nokia
 and Germany's Deutsche Bank.
    Nokia shares jumped 6 percent after it unveiled plans to
return $3.1 billion to shareholders via buybacks and extra
dividends, while Deutsche rose 2 percent after profit fell by
nearly a third in the first quarter but still managed to beat
forecasts. 
    At 0750 GMT the FTSE Eurofirst 300 index of leading European
shares was up 0.6 percent at 1344 points and Germany's
DAX was up almost 1 percent at 9530 points.
    Britain's FTSE 100 index was up 0.5 percent at 6735
points, and France's CAC 40 up 0.2 percent at 4468
points.
    In Asia, the MSCI's broadest index of Asia-Pacific shares
outside Japan fell 0.2 percent.
    U.S. stock futures pointed to a higher open of 0.2 percent
on Wall Street, with M&A fever in pharmaceuticals still the talk
of trading floors after Pfizer Inc said it approached
AstraZeneca Plc  to reignite a potential $100
billion bid.
    "We seem to reaching a number of M&A milestones, with signs
that the volume of large cap M&A deals is now reaching
pre-financial crisis levels," wrote Deutsche Bank strategists in
a note on Tuesday.
    Political news from Ukraine continues to unnerve investors,
but not enough to divert their cash out of riskier assets like
stocks and into safer-haven government bonds.
    The European Union said on Tuesday it imposed sanctions on
15 Russian political and military leaders, including a deputy
prime minister. This followed action from the United States
against Russian individuals and firms on Monday. 
 
    On the economic front, the Federal Reserve begins a two-day
policy meeting on Tuesday, which is expected to result in the
continued paring back of its bond-buying stimulus.
 
    In commodity markets, Brent crude oil was up 0.5
percent at $108.64 a barrel, U.S. crude was up 0.4
percent at $101.22 a barrel and gold was down 0.5 percent at
$1,289.80 an ounce.

 (Reporting by Jamie McGeever and Marius Zaharia; Editing by
John Stonestreet; To read Reuters Global Investing Blog click here; for the MacroScope
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