European markets trade higher as commodity stocks gain DAX surges 1

European stock indices pushed higher to new three week highs today as traders continued to buy into stocks helping the FTSE, DAX and CAC all post gains of between 0.4%-1%.

The FTSE 100 has now gained for six sessions in a row and whilst this may paint a rather rosy picture, I would sound a word of caution as much of the gains have been on the back of fairly meagre volumes and the UK Index has only just returned to pre Japanese tsunami levels. That said, the recovery from the 5600 level on the FTSE 100 has been impressive and reaffirms that traders continue to use price dips as buying opportunities.

It is the German DAX Index that stands out today though, with the Index rallying over 1% and outperforming wider Europe in the process. The Index has fiercely broken back above the psychologically important 7,000 level and this breeds confidence that a close above this level today could give German equities a platform to push even higher.

Today marks the start of three days worth of US jobs data, with ADP employment stats out later this afternoon, followed by tomorrow’s weekly jobless claims and Fridays payroll figures. This makes today’s Index strength all the more important as it shows investors are confident enough to add risk despite the markets entering into a data sensitive few days.

Topping today’s gainers in London is Vedanta Resources after bank Morgan Stanley issued a somewhat bullish note on the miner and the sector alike. The bank told its clients that the acquisition of a 51% stake in Cairn India brings a strong growth profile with low operating cost. The note has triggered a bullish reaction by investors today, pushing Vedanta’s share price to three week highs.

Dixon’s slump 18% on profit warning
On the downside however was shares of Dixon’s Retail, which fell a huge 18% to a new two year low, after the goods retailer warned shareholders that it would not meet profit forecasts. Dixon’s said that profits for the year were likely to be around the £85m mark, someway short of the median of expectations of £105m. The news sends a clear warning sign to goods retailers in the UK and Ireland, after Dixon’s said that consumer confidence has deteriorated, particularly in the context of the government’s austerity drive starting to bite in with the new tax year.