European equity markets extended gains on Wednesday, supported by stronger than expected US economic data which boosted market sentiment and increased risk appetite. The CAC, DAX, IBEX equity indices gained between 0.84% and 1.5%, while the London benchmark index gave back earlier strong gains to finish flat around the 6600 area.
On the macroeconomic front, the US build permits surged by 7.3% in February, while durable goods also climbed higher by 2.2% beating expectations of a modest 1% increase. Furthermore, the Markit services PMI index rose to 55.5 in March, versus 53.3 in February, showing signs of improvement in the US services sector area. Thus, the US dollar climbed higher with the USD index surging above 80.0.
In London, a strong rebound in the UK insurance companies offset losses in the utility and telecommunication companies. Standard Life climbed by 6.98% after acquiring Ignis Asset Management for £390 million, confirming views that Standard Life is moving into investment management in long-term from a typical life insurance company. RSA, Legal and General and Aviva also surged between 1.73% and 4.2%.
On the negative side, the utility companies Centrica and Severn Trent declined sharply by 2.83% and 1.43%, respectively, amid concerns over energy bill hikes.
Tomorrow, investors will be keeping an eye on the release of the UK retail sales, while the main focus in the US will turn to the GDP announcement as well as the weekly jobless claims data and pending home sales for further signs of the current US economic conditions.