Europe close: Stocks rise on stronger-than-expected eurozone growth

(Sharecast News) - European shares closed mostly higher on Thursday after stronger-than-expected eurozone growth improved sentiment, despite an overnight Wall Street sell-off and renewed concerns over tighter monetary policy.

The Stoxx 600 rose 0.67% to 649.36, Germany's DAX gained 0.45% to 25,574.50 and France's CAC 40 advanced 0.92% to 8,485.64, while London's FTSE 100 slipped 0.1% to 10,897.27.

Brent crude fell 1.19% to $89.66 a barrel and West Texas Intermediate eased 0.63% to $83.93.

"Driven by banks and miners today, the FTSE 100 has managed to rally to a fresh record high, though its better performance versus tech over recent weeks means that the gains in London pale in comparison with the frenetic buying in New York," said IG chief market analyst Chris Beauchamp.

"The Fed's decision to swerve a rate hike last night and Warsh's decidedly lukewarm commitment on hawkish policy has walloped the dollar and given commodities space to rally hard,"

Markets had been weaker earlier as tensions between the US and Iran intensified.

US president Donald Trump said Washington planned to start hitting Iran "hard" after US Central Command said Iranian forces launched multiple ballistic missiles at American troops in the Middle East, all of which were intercepted.

Oil initially jumped, with Brent reaching $92.27 and WTI touching $85.

The Federal Reserve meanwhile left its target range unchanged at 3.5% to 3.75%, although three policymakers voted for a rate increase.

Fed chair Kevin Warsh described the disagreement as a "good family fight", while Rabobank said speculation about a further hike was likely to intensify.

"The buyers have come storming back in today, buoyed by the signs of Microsoft actually making money off its huge capex, and given some additional impetus by the GDP figures that give the Fed chairman a boost in his quest to avoid raising rates," Beauchamp said.

"Microsoft is racing away in its best day since the financial crisis, while Sandisk shares are on fire after the drubbing suffered earlier in the week.

"Big rallies are a feature of pullbacks, since hope springs eternal - investors just have to hope tonight's results provide a further excuse to jump back in."

Euro area GDP expands in June quarter

In economic news, Eurozone GDP expanded 0.4% quarter on quarter in the three months to June after stagnating in the first quarter, while annual growth accelerated to 1.0% from 0.5%, Eurostat said.

Ireland recorded the strongest quarterly increase at 3.9%, followed by Lithuania at 1.7%, Finland at 0.9% and Portugal at 0.8%, while Belgium and Austria were flat.

Lithuania led annual growth at 3.8%, ahead of Spain at 2.7%, while Ireland contracted 5.6%.

Eurozone unemployment remained at 6.3% in June, with 11.13m people unemployed. Finland had the highest jobless rate at 10.5% and Cyprus the lowest at 3.0%.

The Bank of England also kept rates unchanged, holding Bank Rate at 3.75% by a six-to-three vote, with Megan Greene, Catherine Mann and Huw Pill favouring a 25-basis-point increase.

The Bank said inflation risks remained tilted to the upside because of elevated energy prices, although there was "little evidence so far" of significant second-round effects and underlying disinflation remained evident.

In the US, initial jobless claims rose by 9,000 to 197,000 in the week ended 25 July from the previous week's 57-year low, while continuing claims fell by 7,000 to 1.78m and the four-week average declined by 5,000 to 202,750.

The insured unemployment rate remained at 1.2%.

Mondi surges, Adidas slumps on results

In equities, Mondi surged 10.92% following its half-year results, while Clariant jumped 16.1% after an Amsterdam court dismissed a damages claim brought by Shell over alleged competition law infringements, supporting the Swiss chemicals group's position that Shell had suffered no harm.

Adidas slumped 11.52% following its results, while Rentokil Initial plunged 20.6% after its own update.

Reporting by Josh White for Sharecast.com.