FXstreet.com (Barcelona) - European markets are going through moderate advances on Tuesday on the back of returning merger and acquisition activities. Dollar has declined across the board, with the Euro testing year high.

Eurostoxx 50 Index advances 0.30%, while the German DAX Index rises 0.4% and french CAC Index trades 0.38% above its opening level. In the UK, the FTSE rises 0.58%.

Telecommunications sector was boosted on Tue4sday on news that Deutsche Telekom and France Telecom will merge their UK operations, while Kraft Food's offer to buy Cardbury contributed to improve sentiment in the food and beverages sector.

Furthermore, basic resources sector rose on the back of gold prices reaching prices above $1,000 an ounce for its first time since February.

On the macroeconomic domain, UK Manufacturing Output rose 0.9% in July, the strongest surge in the last three years, favoured by a 10.4% increase in automobile production. Year on year, manufacturing output has declined 10.1%.

Euro testing year to date high

EUR/USD has rallied about 100 pips on early European session, as the pair soared from levels around 1.4340 to 1.4445 year high, which has not been broken so far. The Euro trades now at 1.4425, 0.65% above its opening level.

GBP/USD has also soared on risk appetite during Tuesday's European morning and from levels around 1.6340, the Pound has soared to 1.6525 high to ease afterwards, yet above 1.6500. At the moment, the Pound trades at 1.6505, 1.02% above its opening level.

USD/JPY retreat from Monday's high at 93.30 has sharpened on widespread Dollar weakness during early European trading, and the pair has broken below the 100 hour SMA at 92.70 to hit an intra-day low at 92.15. At the moment, the Dollar trades at 92.30; 0.78% below its day opening price.