Europe close: Stocks in the green despite China, Volkswagen news

LONDON (ShareCast) - (ShareCast News) - European stocks rose, bouncing back from losses in the previous session as investors digested Eurozone and Chinese data releases. The benchmark Stoxx Europe 600 index finished the session up by 0.09%, while France's CAC 40 rose by 0.10% and Germany's DAX by another 0.44%.

Stocks had opened in the red after data showed the slowdown in China's manufacturing sector accelerated moderately in September, although some economists were wary of reading too much into the latest figures.

Caixin's preliminary Chinese manufacturing sector purchasing managers' index for September dipped to 47.0 - a six-and-a-half year low - from 47.3 in August.

The median projection from economists had been for a reading of 47.5.

Mike van Dulken, head of research at Accendo Markets said equities were in the green following Tuesday's 'risk off' session, "despite a lack major fresh drivers to explain the positive performance, bar some well-timed bargain hunting, a higher oil price and a rebound in French PMI manufacturing." He added that the positive tone suggests markets are becoming increasingly accustomed to China data confirming a slower pace of economic growth.

"Or are we simply back to the old 'bad data is good data' (meaning more stimulus)," he said.

On the corporate front, Volkswagen (Other OTC: VLKAF - news) shares were up for the first time this week as a panel of the car maker's senior supervisory board members met to discuss the allegations by US authorities that it rigged emissions tests for some of its diesel vehicles.

Deutsche Bank (Other OTC: DBAGF - news) cut its 2015 and 2016 year-end targets for the DAX on Wednesday to adjust for news-flow surrounding the car maker.

Meanwhile, the European Automobile Manufacturers' Association put out a statement saying there was no evidence to suggest that this was an industry-wide problem.

German media holding company Axel Springer SE (Other OTC: AXELF - news) was in focus following reports that it was in advanced talks to buy Business Insider in a deal that would value the US digital publisher at around $500m.

Swiss Re (Xetra: A1H81M - news) edged lower after announcing that its business unit Admin Re had agreed to acquire Guardian Holdings Europe Limited, the holding company for operations trading under the name Guardian Financial Services, from Cinven for £1.6bn.

In London, diversified engineering company Smiths Group (Other OTC: SMGKF - news) rallied after posting a 3% increase in full-year pre-tax profit, despite a decline in revenue. The company also named Andrew Reynold Smiths as its new chief executive, with current CEO Philip Bowman stepping down at the close of business on 24 September.

Brewer Diageo was on the back foot. The company said the year had started well and performance was in line with its expectations, but warned that adverse exchange rate movements will hit 2016 operating profits by £150m as demand for premium spirits is impacted in emerging markets.

Data released earlier showed factory and services output in the euro area cooled slightly more quickly than expected in September, despite quicker growth in new work and order backlogs.

Markit (NasdaqGS: MRKT - news) 's Eurozone manufacturing sector purchasing managers' index fell to 52 from 52.3 in August, as expected. However, a similar gauge for service sector activity in the euro bloc slipped to 54 from 54.4 in August, coming in below the 54.2 analysts had expected.

A composite gauge for both sectors dipped to 53.9 - a two-month low - following 54.3 in August, and versus consensus expectations for 54.

BNP Paribas (Xetra: 887771 - news) said: "Overall, the survey suggests the economy is holding up relatively well in view of the global slowdown highlighted by the yet another fall in the Chinese manufacturing PMI last night."