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Markets: Mining stocks encouraged by China GDP figures; Euro in focus

The FTSE 100 is leading its continental neighbours as mining stocks rally after China’s upbeat growth data, while European investors eye the strong euro ahead of this week’s ECB meeting.

China’s forecast-beating growth data provides some distraction from the ever-present influence of monetary policy, although there are meetings from the European Central Bank and Bank of Japan due on Thursday.

European miners are encouraged by the numbers and are setting the pace on the region’s stock markets, even as China’s stock markets are mixed, but holding up off lows hit ahead of the data.

London’s FTSE 100, led by its heavily-weighted metals stocks, is up 0.4 per cent at 7,407.92, turning round from two sessions of declines. The Euro Stoxx 600 is up 0.2 per cent, with the Xetra Dax 30 also rising 0.2 per cent in Frankfurt.

The Shanghai Composite index remains off its lows, down 1.5 per cent, having been 2.6 per cent weaker in initial trade before the data were released. Information technology stocks took the biggest hit, while financials were up 2.7 per cent.

Hong Kong’s Hang Seng is up 0.2 per cent.

The euro is slipping, but remains marginally over $1.1450, down 0.1 per cent on the session at $1.1452. The $1.15 level will be in focus in the run-up to the ECB’s meeting on Thursday, a level to which the central bank is perceived to be sensitive to the shared currency’s strength.

Ronan Carr, European equities strategist at Bank of America Merrill Lynch, says:

The strength of the euro is problematic, especially so close to the key $1.15 level, as the focus shifts this week to the ECB ahead of its monetary policy meeting on Thursday.

European equity investors are increasingly focused on currency and rates markets too. Further strength in the euro will pressure exporters and dollar earners in sectors like industrials, consumer staples and healthcare. Financials are trading very closely with interest rate expectations.

The dollar index, a measure of the US currency against a basket of peers, is inching above 10-month lows hit on Friday, up 0.1 per cent at 95.22. The world’s reserve currency fell as much as 0.6 per cent on Friday as a reading on retail sales and inflation added weight to Federal Reserve Chair Janet Yellen’s comments to Congress that were perceived as dovish.

Brent crude is holding above $49 a barrel and heading for a sixth successive day of gains, with the prospect of deeper Chinese growth also supportive of oil. The international marker is up 0.5 per cent at $49.16. West Texas Intermediate, the US measure, is up by the 0.4 per cent, at $46.74 a barrel.