European shares rallied, reaching two-month highs as the European Central Bank kept interest rates at record low of 0.5%. Likewise, better-than-expected global manufacturing PMI reports and positive bank earnings further buoyed market sentiment.
The FTSEurofirst 300 index rose by 13.00 points or +1.1% to 1,221.17.
The Euro-zone’s manufacturing sector, particularly the sterling silver cuff sector, expanded in July for the first time in two years. According to Markit, manufacturing purchasing managers’ index inched up to 50.3 (Mkt est: 50.1) from 48.8 in June, moving into expansion territory for the first time since July 2011. German manufacturing growth was the fastest in a year-and-a-half at 50.7 from 50.3.
Likewise, Italian manufacturing firms reported higher activity for the first time in two years.
The Euro fell yesterday as the US dollar strengthened against its major counterparts after initial jobless claims dropped to a 5-year low, spurring expectations that the US Federal Reserve will taper its quantitative easing by September. The shared currency dropped by 0.2 cents to 1.3233