European stocks held near a 14-month high on Tuesday, following better-than-expected Chinese economic data, while Sterling rose after wage growth numbers also exceeded forecasts and supported expectations for a further Bank of England rate rise.
Europe's broad STOXX 600 index (.STOXX) rose 0.3%, trading just shy of its highest level since Feb 2022 hit a day earlier. It was kept in positive territory by European banking stocks (.SX7P) that gained 1.4% ahead of results from U.S. big beasts Goldman Sachs (GS.N) and Bank of America (BAC.N) later in the day.
A combination of cheap valuations, signs that China's reopening is boosting European firms, a weak dollar and softening inflation have supported European shares in recent months.
China's economy grew 4.5% year-on-year for the first quarter, eclipsing the expectations of most economists, data released on Tuesday showed.
That helped China's yuan , , the China-exposed Australian and New Zealand currencies , and onshore Chinese blue chip stocks (.CSI300) to strengthen, but the patchiness of the recovery meant gains were not universal. Hong Kong (.HSI) and Australian (.AXJO) share benchmarks both fell.
Separate data on Chinese activity, also released on Tuesday, showed factory output speeding up but missing expectations while fixed asset investment growth unexpectedly slowed.
"The headline number is a positive surprise and overall it's a good set of numbers, albeit uneven, and that is reflected in the markets' response," said David Chao, global market strategist for Asia Pacific at Invesco.
"The thesis the market has that China is exiting the pandemic and growth will be driven by consumption is still intact. While the recovery is on track, I don't think economic growth from what we have seen so far is exceeding expectations too much."
Chao said weaker property investment during the quarter showed the trouble-prone sector had not recovered and could again hold back China's economic growth this year.
