LONDON (ShareCast) - European stocks were already having a good day when better-than-expected US economic indicators gave markets an additional fillip.

The Thomson Reuters/University of Michigan preliminary August index of consumer sentiment unexpectedly rose to 73.6 in August, its highest level since May, from 72.3 in July. Economists had expected the index to remain unchanged or even dip to 72.2.

Meanwhile, the Conference Board's Leading Economic Index climbed 0.4% to 95.8 in July, after falling 0.4% in June.

Banks buoyed by Merkel's support for the ECB

German Chancellor Angela Merkel expressed strong support for the 'save the euro at any cost' stance of European Central Bank (ECB) president Mario Draghi in her meeting with Canada's Prime Minister, Stephen Harper, yesterday.

The rhetoric boosted banks Credit Agricole, SocGen and BNP Paribas in France and Commerzbank and Deutsche Bank in Germany, but the big gains were to be seen on Spanish lenders Santander, BBVA and - especially - Banco Popular Espanol and Bankia. The Reuters news agency reported yesterday that Bankia will receive some bailout funds soon.

Airlines hit by downgrade

In a report on the European airlines sector, Morgan Stanley has lowered the price targets for several airlines.

Morgan Stanley lowered its price target for International Airlines Group (IAG) to €2.25 from €2.50. It also lowered its price target for Lufthansa to €14.70 to €15.70 and EasyJet to 620 from 650p.

Air France gained altitude after the airline's biggest pilots union voted in favour of a new management plan that will cut work-force numbers.

Swiss stocks

Insurance company Swiss Life beat expectations with its net profit for the first half of 2012.

Tourist attraction builder Orascom Development said it expects its first half 2012 revenues will be between one-fifth and one-quarter higher than the corresponding period of 2011. Full year post-tax profit is expected to come in below last year's level, however, largely because of increased building costs and a higher tax charge.

Swiss textile machinery and coating business Schweiter Technologies reported an 11% fall in first half net revenue to CHF.378m. Net profit edged up from CHF.23.1m in the first half of last year to CHF.24.6m, but the company warned that it expects the second half will be tougher than the first.

Other markets

The price of Brent crude eased, with the September futures contract 144 cents lower at $113.83 a barrel in London trading.

German government bonds wiped out the morning's losses to move into positive territory in the afternoon session. The yield on the benchmark 10-year bund eased to 1.50% from 1.535% the day before.

DAX risers
Deutsche Bank € 26.72 +3.53%
Commerzbank € 1.26 +3.27%
Daimler € 41.82 +2.61%

DAX fallers
Bayer € 62.63 -0.90%
Fresenius SE € 86.89 -0.81%
Beiersdorf € 56.52 -0.49%

CAC 40 - Risers
Peugeot (UG) € 6.96 +4.83%
Vallourec (VK) € 39.23 +4.34%
Alcatel-Lucent (ALU) € 1.01 +3.70%
Credit Agricole (ACA) € 4.32 +3.50%
ArcelorMittal SA (MT) € 13.03 +2.72%
Societe Generale (GLE) € 21.50 +2.63%
Alstom (ALO) € 29.05 +2.40%
Schneider Electric (SU) € 51.21 +1.73%
Saint Gobain (SGO) € 27.48 +1.59%
Vinci (DG) € 35.40 +1.42%

CAC 40 - Fallers
Sanofi (SAN) € 66.69 -2.00%
Publicis Groupe Sa (PUB) € 41.44 -1.46%
Pernod Ricard (RI) € 86.15 -1.34%
EDF (EDF) € 16.66 -1.33%
Essilor International (EI) € 68.00 -1.29%
ST Microelectronics (STM) € 4.95 -0.92%
L'Oreal (OR) € 100.30 -0.55%
Danone (BN) € 49.52 -0.47%
France Telecom (FTE) € 11.45 -0.22%
Safran (SAF) € 28.42 -0.19%

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