EUROPE'S main stock markets have rallied further in the wake of positive US economic data, but gold prices have hit fresh low points amid concern over a Chinese credit crunch.
London's FTSE 100 index of leading shares on Wednesday rose 1.05 per cent to stand at 6,166.01 points in late morning deals. Frankfurt's DAX 30 index grew 1.58 per cent to 7,934.99 points and in Paris the CAC 40 jumped 1.89 per cent to 3,718.79.
Madrid's main index surged 2.36 per cent and Milan advanced by 1.97 per cent in value.
The Bank of Spain said on Wednesday that Spain's job-destroying recession was set to ease in the second quarter of 2013, adding its voice to an optimistic chorus emerging from the government.
"Investor sentiment has received a big boost from the strong figures out of the US," said Craig Erlam, market analyst at Alpari traders.
In foreign exchange trading, the European single currency fell to $US1.3038 from $US1.3083 in New York late on Tuesday.
The US dollar slipped to Y97.56 from Y97.80 on Tuesday.
On the London Bullion Market, the price of gold dropped to $US1,224.18 an ounce - the lowest point since August 2010 - and compared with $US1,279 late on Tuesday.
"Despite the improved mood amongst equity traders ... mining stocks remain under pressure, with metals prices taking another hammering," said Matt Basi, head of UK Sales trading at CMC Markets.
Government bonds also remained firmly in focus as Italy's borrowing costs rose sharply on Wednesday, reflecting fresh unease on the debt market at an auction which raised 8 billion euros ($A11.39 billion) in six-month issues.
Rates almost doubled, rising to 1.052 per cent from 0.538 per cent at the last similar operation on May 29, while demand was down, according to the Bank of Italy.
It was the highest rate for six-month bonds to be paid since February, Dow Jones Newswires said, and followed a disappointing bond sale with raised interest rates on Tuesday.
The results increase pressure on Prime Minister Enrico Letta's government as it bids to push through new measures to boost growth in the recession-hit government.
European stock markets though were recovering after last week reeling as the US Federal Reserve indicated that it would soon begin to wind up its stimulus - and as China's lenders were hit by a credit squeeze.
Traders meanwhile breathed a sigh of relief after the People's Bank of China (PBoC) late on Tuesday said it had made money available to some firms to prevent a cash crunch.
And in New York, sentiment won a lift from data showing more strength and confidence in the US economy.
Figures published on Tuesday showed that new orders for durable goods surged 3.6 per cent in May on the back of aircraft sales, while house prices rose a huge 2.5 per cent in one month. In addition, the Conference Board's consumer confidence index jumped to 81.4, up from 74.3 in May.
"There was a concern yesterday that if the data came out above expectations, or significantly above as it did, that it would push equities back into the red as investors continue to worry about Fed tapering later this year," said Erlam.
"Instead, equities held on to gains which was very encouraging and suggests that markets have priced in the tapering."
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