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While you were sleeping European stocks gain

Tuesday 28th May 2013

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European equities advanced as investors judged recent declines as overdone and concern about the end of central bank support premature.

Europe's benchmark Stoxx 600 Index ended the day with an increase of 0.3 percent, following last week's 2.1 percent decline as investors worried that the US Federal Reserve might begin to pare its bond-buying program earlier than expected.

Germany's DAX rose 0.9 percent, while France's CAC 40 climbed 1 percent.

Nobel Prize-winning economist Joseph Stiglitz said it would be premature for the Fed to reduce monetary stimulus.

"It's the only stimulus," the Columbia University professor told Bloomberg News in an interview at the World Economic Forum in Jordan May 25. "Clearly the economy is not back to normal, and to accept this as the new normal would be really wrong."

And analysts believe the outlook for corporate profits remains upbeat.

"The transition to a post US QE [quantitative easing] world will be turbulent," JP Morgan global strategist Dan Morris told Reuters. "But with fundamental drivers for equities still supportive, investors should tighten their seatbelts instead of reaching for the parachute."

US markets were closed for the Memorial Day holiday. So far this year, the Dow Jones Industrial Average has gained 18 percent, while the Standard & Poor's 500 Index has risen 16.7 percent and the Nasdaq Composite Index has advanced 15.1 percent.

UK markets were also closed on Monday.

A slew of US economic reports are scheduled for release in the coming days.

There's the S&P Case-Shiller home price index and consumer confidence numbers, Richmond and Dallas Fed manufacturing surveys, due on Tuesday, followed by the first revision of first-quarter GDP, pending home sales and weekly jobless claims on Thursday, and Chicago PMI and consumer sentiment on Friday.

There was some good news from China to start the week.

Chinese industrial companies' profits growth gathered steam last month. Net income climbed 9.3 percent from a year earlier to 437 billion yuan (US$71.3 billion), following a 5.3 percent gain in March, according to the National Bureau of Statistics in Beijing.

Shares of Canada's Valeant Pharmaceuticals International jumped 10 percent on the Toronto Stock Exchange after the drug maker said it agreed to buy Bausch & Lomb Holdings from Warburg Pincus for US$8.7 billion. The deal will add to 2013 earnings.

"We are thrilled about the deal," James Telfser, a portfolio manager at Caldwell Investment Management, told Reuters. "We are invested in Valeant right now, because we want something exposed to the US and emerging markets and this definitely just beefs up that thesis."

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