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U.S. data clips European gains
LONDON, England (CNN) -- European markets ended off their highs Tuesday after weak U.S. economic data took some of the shine off earlier earnings reports from U.S. bellwether IBM and Dutch Philips Electronics. London's FTSE 100 rose 1.8 percent to 3,916.8 and the CAC 40 blue chip index in Paris gained 1.6 percent to 2,921.52, while Frankfurt's electronically traded Xetra Dax climbed 2.3 percent to 2,839.42 in late trading (the German market was set to close at 1800 GMT). The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 1.8 percent. The insurance, information technology and computer sub-sectors among the top gainers. Gains by European stocks were clipped by a report showing U.S. industrial output -- a key indicator of the economy -- fell in March, compared to a decline of 0.1 percent in the previous month. (Full story) "The latest data confirm that U.S. industrial activity was in recession in the first quarter, but the fact that the uncertainty surrounding the Iraq conflict has been removed means a scenario of gradual recovery in the second and third quarters is not called into question so far," Chloe Magnier, an economist at CIC in Paris, told Reuters. "However, if geopolitical factors were to take the upper hand again, with another potential source of tensions in Syria for instance, then I don't see how we could avoid a scenario of recession." European markets got an initial boost from Philips Electronics, Europe's biggest consumer electronics company. It rose 3.9 percent to 16.77 euros after posting better-than-expected earnings but sales continued to decline as consumers kept a tight grip on their wallets. (Full story) Philips and analysts warned that consumer confidence was still weak, due to the war and poor economic climate globally. "It's hard to be enthusiastic about the consumer goods sector in Europe, which is being squeezed by global competition and flagging consumer demand,'' Anais Faraj, global strategist at Nomura, told Reuters. Shares in IBM (IBM) rose in after-hours trading Monday after the U.S. technology giant reported its first gain in quarterly earnings in almost two years. (Full story) The news helped lift European tech stocks. Cap Gemini Ernst & Young (PCAP), Europe's biggest consumer electronics company, rose 5 percent to 24.90 euros and Europe's biggest software company SAP (FSAP) was up 5.8 percent to 89.21 euros in late Frankfurt trading. The AEX index in Amsterdam rose 3.4 percent and Milan's MIB30 index gained 0.7 percent, while the SMI in Zurich climbed 2.5 percent. In the U.S. on Tuesday, stocks tipped into positive territory in early trading after a lower start as investors mulled some mixed earnings reports and weak economic readings after a day of strong gains. (Full report) At 1500 GMT, the Dow Jones industrial average was up 32.56 points to 8383.66 and the Nasdaq composite added 6.75 points to 1391.70, while the S&P 500 index rose 4.17 points to 889.40.
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