European shares hit a 5-1/2-month high on Tuesday before closing above a key resistance level, boosted by automobile and mining stocks after Chinese economic data raised hopes the country would further ease its monetary policy to stimulate growth.
The FTSEurofirst 300 index <.FTEU3> of top European shares finally managed to end above 1,028 points, a bullish signal, closing provisionally up 0.7 percent at 1,033.18 points. It had earlier climbed to 1,038.37, the highest since early August.
Equity markets are benefitting from news from China. However, it is not due to the strength of the figures but because the slowdown in China is creating high hopes that there will be a big round of stimulus, Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.
Autos <.SXAP>, up 2.6 percent, and basic resources <.SXPP>, up 1.3 percent, were among the top gainers after the news that China's economy grew at 8.9 percent in the fourth quarter of 2011, its weakest pace in 2-1/2 years but slightly stronger than the 8.7 percent that economists had predicted.
(Reporting by Atul Prakash)