Eurostocks firm after data, financial sectors lead

European blue-chip shares padded their gains yesterday afternoon, led by insurance stocks, after US retail and wholesale inflation data that was in line with market expectations, traders said.

By 1245 GMT, the FTSE Eurotop 300 index of pan-European blue chips was up 3.9 per cent, while the narrower DJ Euro Stoxx 50 index jumped 4.4 per cent. The DJ Stoxx insurance index surged seven per cent, and heavyweight banking and financials added more than four per cent each.

The Commerce Department said retail sales fell 1.2 per cent and excluding autos rose 0.1 per cent, while the US Labour Department said producer price inflation rose 0.1 per cent in September.

"The figures were basically in line with expectations and the market is firming, but we're looking to the University of Michigan consumer sentiment indicator later," said an Amsterdam-based equity trader.

Economists polled by Reuters had expected retail sales to fall 0.9 per cent in September after rising 0.8 per cent in August, while excluding autos they had been expected to rise 0.1 per cent. Producer price inflation was forecast to rise 0.1 per cent.

"This data is not enough to disrupt the rollercoaster corrective rally we are seeing in equities which should last another couple of sessions. Then - when this peters out we are back to the bear market picture," said David Brown, an economist at Bear Stearns.

US equity index futures indicated the Dow Jones industrial average would open 120 points higher, while the Nasdaq Composite was expected to rise around 20 points at the start.

German retail giant Metro AG led the gainers, rising 15.3 per cent after it said business in the hard-pressed German market had picked up in the third quarter.

Dutch chip equipment maker ASML jumped 12.7 per cent as the technology sector drew strength from a rally on Nasdaq overnight.