European Markets Extend Gains On Deals And Positive Economic Data

The major European index futures closed Wednesday's session higher, encouraged by M&A activity. Stocks also received a shot in the arm from upbeat readings on the services sector of the region, which accounts for much of the economic activity in the region. Hotels were the best performers among the sectors, as they rose on hopes of industry consolidation. Most financial stocks also advanced after the slump witnessed in the previous sessions, while utility stocks came under some selling pressure. In Germany, chemical makers fuelled much of the gains. Nonetheless, trading volumes were light due to the fact that the U.S. markets remain closed due to Republic Day.

The French CAC 40 Index rose 0.47% to 6,099 and the German DAX Index gained 0.47% to 8,075. The U.K. FTSE 100 Index advanced 0.50% to 6,673. Despite the gains of the last two sessions, the major averages of the region are still trading shy of their multi-year highs reached in mid-June.

Crude oil futures, which receded $0.21 to $71.20 a barrel on Tuesday, fell further on Wednesday.

In Paris, hotel stock Accor surged up 10.26%, while Cap Gemini climbed 2.59%. Peugeot, Schneider Electric, Dexia, Vinci and Sanofi-Aventis are the other notable decliners. On the other hand, metal fabrication company Vallourec fell 2.29%. Thomson, Renault and Carrefour also receded in the session.

Among German stocks, Henkel surged up 3.27%, while Infineon Technologies, Continental, Man, Volkswagen, TUI, Linde, Bayer and BMW were all up over 1%. BMW reported that its U.S. sales rose 6% in June. Meanwhile, DaimlerChrysler, which posted a 1.8% decline in U.S. sales, receded 0.78%, Utility stocks were also lower in the session.

In the U.K., the gains were led by British Airways, which rose 5.25%. The air carrier said its overall load factor rose 0.4 points to 73.8%. The company's passenger load factor fell 1.4 points in June from last year, as revenue passenger miles declined 1.4%.

Restaurant stocks InterContinental Hotels, Punch Taverns and Whitbread advanced 3.89%, 3.01% and 2.96%, respectively in reaction to U.S. hotel chain Hilton's proposed sale to Blackstone Group for $26 billion. Financial stocks, including banks, property trusts and insurers rose ahead of a key interest rate decision by the Bank of England, scheduled for Thursday.

Oil stocks BG Group and BP posted modest gains, while Shell receded marginally. However, mining stocks were mixed. Gold miner Lonmin fell 1.71% and was the top loser of the session, while Rio Tinto and Antofagasta also declined. However, the rest notched up modest gains.

Among the economic reports released during the day, the services purchasing managers' index of the U.K, compiled by the Chartered Institute of Purchasing and Supply and NTC, rose to 57.7 in June from 57.2 in May. Meanwhile, the French services PMI climbed to 59 in June from 57.9 in the previous month. The euro zone's services PMI increased to 58.3 in June from 57.3 in May. The Eurostat, the statistical arm of the European Union released retail sales report for May, while eased 0.5% from the previous month, but rose 0.4% from the previous year.