European Stocks Rise on European Central Bank Bond Buying, U.K. Deflation

LONDON (TheDeal) -- Mainland European stock indices rose sharply on Tuesday after a European Central Bank board member said the bank would boost its government-bond buying program before the summer. The comments from Benoit Coeure boosted bonds but they weighed on the euro, sending the currency down 1.1% against the dollar.

U.K. indices also gained ground, following a strong day in Asia, which piggybacked off record closing levels on Wall Street.

From Germany, the ZEW research institute's indices of analysts' and investors' economic sentiment in both Germany and the eurozone fell below expectations, while April consumer price figures from Eurostat for the eurozone matched initial estimates, putting the April inflation rate at zero.

But Office for National Statistics figures showed that the faster growing U.K. economy has now slipped into deflation, with consumer prices in April down 0.1% on the year. The pound fell 0.8% against the dollar.

In Frankfurt, the DAX shot up 1.69% at 11,790.00. In Paris, the CAC 40 surged 1.72% to 5,098.31. In London, the FTSE 100 was up 0.31% at 6,990.20.

Ireland's DCC (DCCPF), a FTSE 250 member, surged about 10% in London on news that it has bid €464 million ($519 million) for Royal Dutch Shell's (RDS.A) French liquefied petroleum gas business and has been granted exclusivity to finalize a deal.

But engineering group Aveva (AVEVF), which rose on Monday on bid speculation, was down almost 5% after reporting full-year results that showed revenue declined 12%, with pretax profit down 20%.

And telecom Vodafone (VOD) fell on disappointment about EBITDA guidance for the current year that it delivered with full-year results.

FTSE 100 home builders Persimmon (PSMMF) and Taylor Wimpey (TWODF) rose after Office for National Statistics figures showed that the pace of house price growth accelerated in most of the U.K. in March.

In Frankfurt, carmakers Daimler (DDAIF) and Volkswagen (VLKAY) and tire maker Continental (CTTAY) led the DAX higher after Association of European Carmakers figures showed that European car sales in April rose to their highest level since 2009.

New registrations rose 6.9% year-on-year to 1.17 million. In Paris, Renault (RNSDF) and Peugeot (PEUGF) were among other European carmakers to be trading higher the on the back of those figures.

Separately, Germany's Continental agreed to pay €600 million ($678.7 million) for the car parts business of Finland's Elektrobit (EBTTF), which has scrapped plans for a demerger and will change the name of its remaining wireless business to Bittium.

The Finnish company's shares were up more than 20% in Helsinki by late morning.

Amsterdam-listed insurer Delta Lloyd (DLLLF) rose sharply as it reported a 4% rise in first-quarter gross written premiums and an improved solvency ratio.

In Tokyo, the Nikkei 225 closed up for a third day, hitting its highest level in three weeks. The index closed up 0.68% at 20,026.38. The Topix closed up 0.41% at 1,633.33. In Hong Kong, the Hang Seng closed up 0.37% at 27,694.03. Mainland Chinese indices surged, with the Shanghai Composite Index up 3.13% at 4,417.55.

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