European stocks, euro rally on China data

European stocks rallied and the euro advanced against the dollar on Wednesday as upbeat Chinese data helped to offset Greece debt worries, traders said. All eyes were on Facebook as it prepared to file papers for an initial public offering seeking to raise at least $5.0 billion just eight years after the launch of the social networking giant. Elsewhere on Wednesday, the EU Commission vetoed a transatlantic tie-up of the Frankfurt and New York stock exchanges. Approaching midday in London, the benchmark FTSE 100 index was up 1.44 percent at 5,763.30 points. Frankfurt's DAX 30 jumped 1.99 percent to 6,587.82 points and in Paris the CAC 40 climbed 1.63 percent to 3,352.22. The euro gained to stand at $1.3141 compared with $1.3080 late in New York on Tuesday. "Positivity abounds ... and shares are pushing higher on the back of better-than-expected Chinese data pointing to steady underlying manufacturing conditions in the world's second largest economy," said Anita Paluch, a trader at Gekko Global Markets. China's manufacturing activity improved in January despite weaker demand for exports, official figures showed Wednesday, raising hopes that the Asian nation's economy was heading for a soft landing. The official purchasing managers index (PMI) rose to 50.5 in January, up slightly from 50.3 in December, the China Federation of Logistics and Purchasing said in a statement. A reading above 50 indicates the sector is expanding while a reading below 50 suggests a contraction. The improvement came despite mounting evidence that China's overall economy is slowing as Europe's sovereign debt crisis and weakness in the United States hits exports, a key engine for growth. Asian shares closed mixed amid the Chinese data, weaker-than-expected US economic data, slumping Japanese corporate earnings and ongoing uncertainty over Europe's debt crisis. Tokyo ended flat, Seoul rose 0.18 percent and Sydney slipped 0.87 percent. Wall Street also closed mixed overnight after the Conference Board's consumer confidence index fell to 61.1 in January from 64.8 a month earlier, showing a downturn in Americans' hopes for an economic rebound. According to US media, the prospectus for Facebook's initial public offering could be filed with the US Securities and Exchange Commission as early as Wednesday. The Wall Street Journal broke the news of Facebook's impending IPO last week, saying the Palo Alto, California-based company planned to raise $10 billion at a valuation of between $75 billion and $100 billion. The $10 billion target had been halved to a more conservative $5.0 billion in reports emerging late Tuesday in The New York Times and International Financing Review. "Facebook is expected to file its IPO documents today, which could provide a fillip to tech stocks," said Chris Beauchamp, an analyst at traders IG Index. "US markets are expected to open substantially higher," he added in a note to clients.