* Spain's Ibex 35 rallies 1.2 pct after strong data
* Sustainable recovery to boost Spanish stocks - Deutsche
* FTSEurofirst 300 up 0.1 pct as China, U.S. data caps
By Francesco Canepa
LONDON, Jan 6 Spanish stocks led European
bourses higher on Monday after strong economic data fuelled
expectations of an economic recovery in the country and revived
interest in stocks in the euro zone periphery.
Spain's IBEX index was up 1.2 percent at 1532 GMT,
outpacing its regional peers after data showed the country's
service sector grew at its fastest pace in 6-1/2 years.
Domestically focussed lenders such as Banco Popular
and Banco de Sabadell, which stand to benefit from
improving economic conditions in Spain, were among top gainers,
surging 7.1 percent and 3.6 percent, respectively.
Upbeat data has helped the broader MSCI Spain index rise
some 30 percent over the past six months, making it the best
performer among major European indexes, Datastream data showed.
"We think this is really the start of the improvement in
data and we see as a sustainable story," said Gareth Evans, a
strategist at Deutsche Bank.
He expected Spanish and Italian stocks to outperform a 14
percent rise in the broader STOXX Europe 600 index this
Italy's FTSE MIB was up 0.9 percent on Monday as a
poll of the country's services sector activity showed the pace
of contraction eased in December.
Even after their recent rebound, Spanish and Italian stocks
offer more attractive valuations than their peers in the core
countries of Germany and France.
MSCI's indexes of Spanish and Italian shares respectively
trade at a 30 percent and a 50 percent discount to the MSCI
Europe based on their price\book value ratios, Datastream data
showed, a steeper discount than the indexes' 10-year averages.
"I'm overweight on the periphery, as opposed to France and
Germany," Clairinvest fund manager Ion-Marc Valahu said.
"There's still some value there."
The broader FTSEurofirst 300 index of pan-European
shares was up 0.1 percent at 1,313.78 points while the euro
zone's Euro STOXX 50 was up 0.2 percent at 3,079.84
points as weak Chinese and U.S. data curbed appetite for global
Darren Courtney-Cook, head of trading at Central Markets
Investment Management, said there may be some short-term
pull-back on the European stock markets later this month as
investors look to cash in gains after the region's strong finish
The FTSEurofirst 300 rose 16 percent in 2013 to mark its
best annual gain since 2009, while the Euro STOXX 50 index rose
Courtney-Cook felt the Euro STOXX 50 could fall to 2,950
points over the next two weeks, but added that traders should
use any such weakness to buy up stocks.
"There could be a pull-back, but you should buy into that
pull-back," he said.