EU Markets up on China comments but Eurozone concerns dampen sentiment

European markets experienced pressure from two sides on Wednesday resulting in muted gains.

Miners led the UK market higher in early trading, following comments from China overnight which boosted optimism for growth, however weaker than expected PMI figures from Europe exerted a downward pressure on stock indices and news of a deadlock in the fiscal cliff negotiations depressed sentiment further in the afternoon.

Volumes remained weak at just 32% of their already weak 90 day daily average and going into the close the FTSE was trading up 0.1% the DAX 0.1% and the CAC 0.1 %.

Last night China’s new leadership, the Communist Politburo, stated that the economy was stabilizing and implied that its supportive economic policy would remain in place for the foreseeable future. Such news resulted in a rise for resource firms as China is a major user of natural resources. Rio Tinto gained 2.63% and Kazakhmys top the leader board up 3.7%.

Indices however began to retrace away from session highs following the release of the European services PMI data, which showed there were few signs that the Eurozone will emerge from recession anytime soon. The euro zone is expected to grow by just 0.1% in 2013. Chancellor of the Exchequer George Osborne also delivered his autumn statement. He said that the UK economy will shrink 0.1% in 2012 down from the previous forecast of 0.8%growth. Overall the picture within Europe remains bleak and there is a very real threat of a triple dip recession for the UK.

Focusing on single stocks Tesco also put in a notable performance rising over 3% following comments that it would conduct a review of its Fresh and Easy business in the US. The share price of the supermarket giant had struggled since its profit warnings on 9th January 2012 which saw it drop from just under £4 per share to £3.13. However, investors seem to believe the strategic review is a step in the right direction, the company intends to focus on its struggling home business and faster growing emerging markets.