The European markets rose for the fourth day on Tuesday, helped by a rally among defensive stocks and comments from Deutsche Bank Chief Executive officer Josef Ackermann that the bank had a good start to 2009.
Meanwhile, the German government forecast the largest Eurozone economy to contract in the range of 4% to 4.5% this year, the German newspaper Bild reported today. In January, the government had estimated an annual contraction of 2.25% for 2009.
The Essen-based RWI research institute also lowered the GDP estimate for this year. The institute said the German economy is expected to shrink 4.3% in 2009 compared to a 2% decline estimated in December.
Crude for May delivery fell $0.82 to $52.98 a barrel on the New York Mercantile Exchange, by the time the European markets closed, as a stronger dollar made commodities less attractive and markets prepared for possible news of growing U.S. crude stockpiles.
The FTSEurofirst 300 index of pan-European blue chips closed 0.18% higher at 740.83 points, while the narrower DJ Stoxx 50 index rose 0.15% to 1,832.15 points.
Around Europe, France's CAC 40 index rose 0.17% to 2,874.39 and Germany's DAX index surged up 0.26% to 4,187.36, while the U.K.'s FTSE 100 index slipped 1.05% to 3,911.46.
Deutsche Bank, Germany's biggest lender, climbed 4.5% after Ackermann said the bank made a good start to 2009 and that he expects the bank to return to profitability in the year. Commerzbank, Germany's second largest bank, surged up 9.6%.
Defensive stocks such as food producers and drugmakers rallied, as investors remained cautious. Nestle, the world's largest food company, rose 1.6%, while consumer products giant Unilever climbed 4% and Danone, the world's largest yoghurt maker, surged up 3.7%.
Sanofi-Aventis, France's biggest drugmaker, rose 2.2% and Novo Nordisk, the world's biggest insulin maker, added 3.2%.
On the other hand, HSBC, Europe's largest bank, dropped 6.3% on concerns over Asian growth after Bank of China reported a 58% drop in fourth quarter profit.
Mining stocks slid after copper prices declined. BHP Billiton, the world's biggest miner, slipped 4.8%, while Anglo American, the second biggest, dropped 6.7% and Rio Tinto, the third biggest, fell 2.2%. Copper miner Antofagasta lost 8%.
Similarly, heavily weighted oil stocks fell after crude oil prices retreated. BP, Europe's biggest oil company, declined 0.8% and Royal/Dutch Shell, the second biggest, slipped 2.5%.
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