LONDON, Nov 24 (Reuters) – European shares bounced back from six-week lows on Wednesday as encouraging economic data boosted appetite for riskier assets, although worries about debt levels in peripheral euro zone countries kept investors jittery.
The FTSEurofirst 300 index of top European shares closed 1 percent higher at 1,087.67 points. On Tuesday it fell 1.5 percent and hit a six-week low 1,074.06. The index has gained 4 percent in 2010, against a 26 percent jump in 2009.
Automakers led the gainers list, with the STOXX Europe 600 Automobiles & Parts index surging 3.8 percent on hopes of global economic recovery. Porsche SE rose 6.3 percent, while Daimler AG advanced 5.1 percent.
The equity market was supported by positive data that showed German business sentiment rose in November to its strongest since 1991, new U.S. claims for unemployment benefits last week dropped to their lowest in more than two years, and U.S. consumer spending rose in October.
“This combination of good data from across the globe has been welcomed by equity investors who’ve suffered a terrible bout of the blues since the Ireland debacle unfolded a few weeks ago,” Angus Campbell, head of sales at Capital Spreads, said.
Ireland unveiled a 15 billion euro ($20 billion) four-year austerity plan, imposing deep spending cuts and tax increases to meet the terms of an EU/IMF bailout.
Appetite for risky assets rose, with the VDAX-NEW volatility index falling 7.4 percent. The lower the index, which is based on sell and buy options on Frankfurt’s top-30 stocks, the higher the market’s desire to take risk.
Miners got strength from higher metals prices, which gained on supply concerns and hopes of a rise in demand following good economic numbers.
The STOXX Europe 600 Basic Resources index rose 2 percent, while Antofagasta gained 4.3 percent and Xstrata rose 4.2 percent.
But some analysts advised caution and pointed to other economic numbers that showed a surprise drop in new U.S. home sales last month. They said that data was a reminder growth would remain sluggish.
Tensions in the Korean peninsula and concerns of contagion from Ireland’s debt crisis also prompted caution.
“It’s possible that we will continue to have volatility without too much movement into the end of the year. The next year will be challenging as [the euro zone debt] problems are still there,” Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said.
Banking shares were generally higher, but Bank of Ireland slumped 11 percent, BNP Paribas was down 0.4 percent and Natixis slipped 1.2 percent. Bank of Ireland is now down 44.5 percent this week.
British company Compass gained 7.3 percent after full-year profit beat forecasts and the world’s biggest contract caterer raised its dividend.
Across Europe, the FTSE 100, Germany’s DAX and France’s CAC 40 rose 0.6 to 1.8 percent. The Thomson Reuters Peripheral Eurozone Countries Index was up 0.1 percent.