European stocks traded mixed Tuesday, with futures prices pointing to an uncertain open on Wall Street, as investors continued to focus on mounting regional political risks amid much stronger-than-expected economic data.
The region-wide Stoxx 600 Europe Index gained 0.22% to trade at a one-year high of 371.84 by 10:00 GMT even as two of the region's benchmarks drifted lower. Germany's DAX index led gains, however, with a 0.34 advance, offsetting a 0.35% dip for the FTSE 100 and a 2.1 point slide for the CAC-40 in Paris.
London stocks were held down by a sharp fall for HSBC plc (HSBC) - Get Report after Europe's biggest bank posted much lower-than-expected full year earnings and increased its share buyback program Tuesday after taking a multi-billion dollar writedown on its European private banking assets.
HSBC shares fell more than 6.3% in London trading to change hands at 667.1 pence each, trimming the three month gain to just over 5%.
European bond markets were also active after private sector data showed that economic activity in the single currency area surged to its fastest pace in nearly six years as factories in Germany fulled job creation and France's service sector boomed.
IHS Markit Economics' composite reading of Eurozone growth rose to 56.0 in February, up from 54.4 in January and the highest reading since April 2011. The figures indicate first quarter GDP growth of around 0.6%, Markit said, noting that job creation in the services sector rose to its strongest pace in more than nine and a half years and manufacturing headcount surged to a six-year high. Exports also grew the most since April 2011 "due to the combination of rising demand and the weaker euro", Markit said.
The euro was little-changed following the release and was marked at 1.0560 against a rising U.S. dollar by 09:10 GMT. The single currency has fallen more than 2% this month and is down more than 6.5% against the greenback since the November elections.
Germany's benchmark 10-year bond yields rose 2 basis point to 0.32% while French 10-year notes extended losses to trade at 1.10%. Germany's 2-year notes, known as schatz, traded at a record low of 0.872%.
Investors continue to be unsettled by weekend polling in Germany that indicated the first slippage into second place for Chancellor Angela Merkel and her CDU/CSU government coalition in more than a decade. Merkel faces what could be the most serious political challenge of her career next fall in federal elections that are likely to rest upon her government's handling of both the migrant crisis and the ongoing bailout in Greece and her centre-left Social Democrat (SPD) rivals have captialized on her perceived dithering.
Overnight in Asia, the U.S. dollar rose firmly as investors dumped European currencies amid rising bond yields linked to electoral developments in France, where far-right Presidential candidate Marine Le Pen continues to poll much higher than political experts had previously predicted.
The dollar index, a measure of the greenback's strength against a basket of six global currencies, traded at 101.41 by 10:00 GMT, up more than 0.4% on the session.
The advance held the yen in check, which correspondingly boosted export shares on the Nikkei 225, allowing the benchmark to end the session 0.68% higher at 19,381.44 points. The broader TOPIX index closed 0.56% higher at 1,555.60 points.
Around the region, the MSCI Asia ex-Japan index, which has been hovering around 19-month highs for much of the past two weeks, edged 0.03% higher by the start of European trading.
Global crude markets were also on the rise, with traders citing data showing bullish positions at a record high offsetting concerns about rising production volumes from the United States. WTI futures for April delivery were quoted around 0.8% higher at $54.32 while Brent contracts for the same month were changing hands at $56.72 .
Wall Street begins trading for the week later Tuesday following the Presidents' Day holiday, with investors anticipating a modest decline of just one or two points for the Dow Jones Industrial Average. Futures prices are also signalling a half-point dip for the S&P 500 and a 2.6 point fall for the Nasdaq at the opening bell.