Europe close: Stocks buoyed by strong IFO reading
European shares were little changed on Tuesday even as investors cheered a strong reading on the closely-followed gauge of business confidence in Germany.
"Overall, these numbers confirm what everyone by now has been expecting for the past month, namely that a strong recovery in economic activity is underway as vaccination holds the virus at bay, even as restrictions are eased," said Claus Vistesen, chief economist at Pantheon Macroeconomics.
The pan-European Stoxx 600 index rose just 0.03% to 445.2 points. Germany's DAX nevertheless extended its record run, rising 0.18% alongside to 15,465.09.
France's Cac-40 on the other hand dipped 0.28% to 6,390.27, while the FTSE Mibtel was essentially unchanged, up 0.01% to 24,892.90.
Euro/dollar meanwhile edged up 0.16% to 1.2235.
Revised data from the Federal Office of Statistics showed that the German economy shrank by a greater-than-expected 1.8% in the first three months of the year (consensus: -1.7%).
But that was more than offset by the latest reading on the German IFO institute's business confidence index, which revealed a surge in business morale in May, with companies turning more upbeat in the light of falling coronavirus infections and easing of restrictions.
The index jumped from a reading of 96.6 for April to 99.2 in may (consensus: 98.0).
Shares in Deutsche Wohnen climbed 15.7% after Vonovia announced an €18bn takeover of the German property group, with shares of the latter falling 5%.
UK shares were down 0.31% with the FTSE 100 seeing the day out from 7,029.79, despite a fall in government borrowing in April, although it remained at its second highest level on record for the month.
Public sector borrowing was £31.7bn, down £15.6bn from the same month last year and marking the first annual fall since the start of the pandemic. The amount was comfortably below the Office for Budget Responsibility’s forecast of £39bn and consensus expectations of £32.4bn.
Shares in AstraZeneca slipped as the UK competition regulator said it was starting a probe into its $39bn tie-up with Alexion of the US. Rival drug maker GlaxoSmithKline also fell on the news.
Miners were on the back foot after China said it would strengthen price controls of key commodities, warning against hoarding and speculation in an attempt to slow down price rises.
HeidelbergCement shares also gave back ground, after US construction materials supplier Martin Marietta Materials said it would buy the German company’s assets in California and Arizona for $2.3bn.