By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Solid trade data from both China and the
U.S. spurred a risk-on sentiment across financial markets on
Friday, sending European stocks higher, with banks leading the
charge north.
The Stoxx Europe 600 index picked up 1.1% to 286.91, recouping
from a 0.2% loss on Thursday, when a dovish turn by European
Central Bank President Mario Draghi failed to boost sentiment.
Friday's gains were, however, not enough to push the index into
positive territory for the week, leaving it poised for a 0.4%
weekly decline.
"After a buoyant few weeks for global investment markets,
investors were given a gentle -- yet timely -- reminder this week
that the euro zone's persistent debt problems hadn't gone away,
they've simply been bubbling away just beneath the surface," said
Oliver Wallin, investment manager at Octopus Investments in a
note.
However, he was still positive on the prospects for 2013,
although slightly cautious.
"Our view that markets are overbought persists. As a result we
have been taking profits from the better performers within our
portfolios throughout the month, reallocating to more defensive
cyclicals that have not had such a good time of it," he said.
Shares of Vodafone Group PLC (VOD) gained 1.6%, after Bank of
America Merrill Lynch lifted the wireless-telecom firm to buy from
neutral.
Shares of DNB ASA rose 5%, after Credit Suisse lifted the
Norwegian bank to neutral from underperform following a
better-than-expected earnings report earlier in the week.
On a downbeat note, shares of Telecom Italia SpA shaved off
0.7%. The firm said it didn't meet its 2012 year-end targets for
gross operating profit and net debt reduction. .
Shares of SSAB AB slumped 4%, after the Swedish steelmaker
posted a wider-than-expected operating loss in the fourth quarter
and cut its dividend.
The broader European gains came as investors took inspiration
from a mostly positive trading day in Asia, after Chinese-trade
data generated some optimism that the country's economy is on an
upward trend.
Trade data for January showed monthly exports jumped 25% and
imports climbed 28.8% from the year-ago period, giving the country
a trade surplus of $29.2 billion. All three figures beat market
expectations. .
"China's trade growth surprised the market for a second month in
a row," analysts at Société Générale said in a note.
"Detailed destination data showed more clearly the impact of the
base effect. The degree of [year-on-year] growth improvement in
January 2013 for an exporter (or importer) was well correlated with
the degree of deterioration in January 2012," they said.
Later in the data, U.S. data showed the U.S. trade deficit sank
20.7% to $38.5 billion, marking the smallest trade gap since
January 2010. The sharper-than-expected decline almost certainly
means the U.S. economy actually grew in the fourth quarter instead
of contracting 0.1% as previously estimated.
U.S. stocks opened higher on Wall Street.
In Europe, leaders from the EU member states reportedly moved
closer to agreeing on cutting the union's budget by 34.4 billion
euros ($46.1 billion) to EUR960 billion over the next seven years.
Such a cut would mark the first budget reduction in the bloc's
history.
Movers
Among country-specific European bourses, France's CAC 40 index
rallied 1.2% to 3,645.09, with banks on the rise. Shares of BNP
Paribas SA rose 2.6%, while shares of Société Générale SA gained
3%.
In the U.K., shares of banking heavyweight HSBC Holdings PLC
(HBC) rose 2.2%. The FTSE 100 index gained 0.7% to 6,274.01.
Antofagasta PLC climbed 1%, helped higher after HSBC raised the
miner to neutral from underweight. .
The bank also upped Anglo American PLC to overweight from
neutral, sending its shares 2.7% higher. Metal prices were
mixed.
And in Germany, the DAX 30 index put on 0.8% to 7,649.53.
Shares of BMW AG rose 2.3%, after the car maker said it expects
further sales growth and targeted an all-time high in 2013. .
Outside the major indexes, shares of Swiss Life Holding AG
picked up 4.5%, as J.P. Morgan Cazenove lifted the insurance firm
to overweight from neutral.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires