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Europe close: Eurozone data offsets Greece, China woes to help equities close higher

LONDON (ShareCast) - (ShareCast News) - European shares closed marginally higher as a raft of positive corporate news and economic data helped to offset earlier concerns about the continuing slowdown in China and a turbulent resumption of trading on the Greek stock exchange after a five week shutdown.

The main Greek index, the Athex, plummeted 23% at the opening, with banks bearing the brunt. The Athex composite index closed at 668.06, a fall of 129.46 points or 16.23%.

The market was also hit by data showing the Hellenic manufacturing sector's PMI fell to 30.2 points in July, according to Markit (NasdaqGS: MRKT - news) , recording its worst performance since the company started compiling the data in 1999. A reading below 50 signals contraction in activity.

Markit analysts said production needs fell as new orders plummeted while manufacturers had difficulty in sourcing materials to complete work.

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Asia experienced another negative session after Caixin's China purchasing managers' index came in at 47.8 in July, which was below the preliminary reading and marked a two-year low. Analysts were expecting the index to rise to 48.3.

Three sets of US data had little impact on European bourses, with only the ISM PMI index coming in below expectations.

Broader European market sentiment was underpinned by earlier data revealing that the Eurozone manufacturing sector expanded steadily in July despite the drastic slowdown in Greece.

The final Markit manufacturing Purchasing Managers' Index came in at 52.4, marginally above the flash estimate of 52.2, but below June's 14-month high of 52.5. "The Eurozone manufacturing economy showed encouraging resilience in the face of the Greek debt crisis in July," said Chris Williamson, chief economist at Markit.

The Stoxx600 index closed 0.655 higher at 398.93.

The FTSE 100 was the only European index to close in negative territory, finishing 15.56 points lower at 6,680 on weak Chinese and US manufacturing data.

The rest of Europe's market was helped by upbeat earnings and corporate news across the Continent.

Shares (Berlin: DI6.BE - news) in Dutch brewer Heineken (Other OTC: HEINY - news) rallied after it posted a rise in first-half profit and revenue as solid sales in Latin America, Asia and the US helped to offset weakness in the European market.

In London HSBC shares rose after the bank's first-half profit beat expectations on the back of a strong performance in Asia. It also announced the sale of its Brazilian business to Banco Bradesco for $5.2bn.

Rolls-Royce rose sharply, extending gains that began on Friday after it emerged that US hedge fund ValueAct has built a 5.4% stake in the aerospace and defence company. On Monday, the Financial Times reported that ValueAct is urging Rolls-Royce to accelerate cost cuts in its core aerospace business. It cited sources as saying that the fund is also likely to encourage an eventual sale of the company's non-aerospace division when the board conducts a strategic review.

Commerzbank (Xetra: CBK100 - news) was on the front foot after it said net profit in the second quarter more than doubled amid rising revenue, while Heineken rallied after the brewer's first-half sales beat expectations.

Dutch parcel delivery company PostNL NV made strong gains after its second-quarter profit came in stronger than expected, while London-listed Rolls-Royce rallied on reports that activist fund ValueAct is urging it to accelerate cost cuts in its core aerospace business.

The final US July Markit PMI rose slightly to 53.8 in July from 53.6 in June but was unchanged from the flash estimate.

US personal consumption expenditure rose 1.3% year-on-year in June, above expectations for a 1.2% increase. Personal (LSE: PGH.L - news) spending rose 0.2%, as expected, while personal income climbed 0.4% to beat forecasts for a 0.3% gain.

The US ISM manufacturing index ticked lower in July, falling from 53.5 in June to 52.7, below consensus expectations for a stable reading.

The slight drop brought the index to its lowest level since April this year, although the decline was driven by components that analysts believe to be less indicative of future growth.

Production rose from 54.0 to 56.0, registering its strongest level since April, while new orders edged higher from 56.0 to 56.5 to mark their strongest reading for the year to date.