RTTNews - The major markets across Europe are likely to open higher on Wednesday, taking cues from Wall Street, where the major indices shrugged off weak housing data and surged ahead on expectations of a recovery following the release of better-than-expected consumer confidence reading.
U.S. consumer confidence showed a substantial improvement in the month of May, according to a report released by the Conference Board on Tuesday, with the consumer confidence index rising to its highest level in eight months. The report showed that the consumer confidence index rose to 54.9 in May from an upwardly revised 40.8 in April. Economists had expected the index to edge up to 42.6 from the 39.2 originally reported for the previous month. Earlier, a report released by Standard & Poor's revealed that home prices continued to show record declines in the first quarter of 2009, suggesting that the recent signs of revival in the housing market had not yet resulted in a turnaround in prices.
Traders largely shrugged off the data, however, citing the lagging nature of the numbers and choosing to focus on the encouraging consumer confidence data. The Dow closed up 196.17 points or 2.4% at 8,473, the Nasdaq rose 58.42 points or 3.5% to 1,750 and the S&P 500 closed up 23.33 points or 2.6% at 910.
The markets across Asia are trading in positive territory, buoyed by the surge on Wall Street overnight as hopes of a global economic recovery resurface yet again.
The markets across Europe ended in positive territory on Tuesday helped by positive economic data from the U.S., shrugging off the news that the largest economy in the region, Germany, fell deep into recession. Germany's Federal Statistical Office said that the economy contracted 3.8% on a sequential basis in the first quarter, which was the fourth straight quarter of decline and the biggest fall since records began in 1970. In the fourth quarter of 2008, the gross domestic product had slipped 2.2%.
The FTSEurofirst 300 index of pan-European blue chips closed 0.87% higher at 865 points, while the narrower DJ Stoxx 50 index rose 1.18% to 2,126 points. The U.K.'s FTSE 100 index surged up 1.06% to 4,412, while France's CAC 40 index rose 1.05% to 3,270 and Germany's DAX index climbed 1.37% to 4,986.
On the economic front, French statistical office INSEE is due to release results of the consumer confidence survey and business confidence survey for May shortly before the markets open for trading. Economists forecast a reading of minus 40 for May, up from minus 41 in April. The business confidence indicator is projected to increase to 73 from 71. The general production outlook indicator is seen rising to minus 16 from minus 18.
In corporate news, Swiss bank, UBS AG might see activity after the CEO confirmed that the bank would pay market wages following criticism that it raised salaries at its investment bank higher than market wages.
Automakers might react to news about the German Government's decision on Fiat SpA's proposal to acquire Opel unit from General Motors. The chairman of the company is slated to speak at a conference later in the day.
Airline stocks will be in focus after low-cost carrier Air Berlin Plc reported wider than expected loss in the first quarter despite a 1.2% rise in revenues.
France Telecom is likely to be in the spotlight after it confirmed that the company, which is on course to generate as much as 8 billion euros through 2011, is not interested in any major acquisitions in the near term.
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