- Chinese economy grows
- UK jobless rate falls
- Yellen reiterates concerns on US economy

FTSE 100: 1.11%
DAX: 1.44%
CAC 40: 1.48%
FTSE MIB: 3.17%
IBEX 35: 1.84%
Stoxx 600: 1.34%

European stocks gained as China's economy grew to meet the government's target and the UK jobless fell more than expected.

Gross domestic product (GDP) in China rose 7.5% in the three months to June from a year earlier, beating the forecast for a 7.4% increase, signalling that stimulus measures by the government are making their way through the economy.

"Today's Chinese data has been a real boost for investors who have been looking for any reason to buy the dips recently," said Craig Erlam, analyst at Alpari UK.

"Given the concerns about Chinese growth earlier this year, it is a big relief to see the country growing at 7.5% in the second quarter, even if this is largely due to the targeted stimulus efforts of the government and central bank. As long as this continues, investors will be happy."

The UK unemployment rate fell to 6.5% in the three months to May from 6.6% the previous quarter, a near five-and-a-half low. Jobless claims dropped 36,300 in June, after a 32,800 a decline a month earlier. Economists had predicted a decrease of 27,000.

However, regular pay rose just 0.7% on a year ago in the three months to May, down from 0.9% in the three months to April.

"Irrespective of the doubts over the data, until pay growth starts to pick up, the Bank of England will be reluctant to raise interest rates for fear that households will be unable to withstand the higher mortgage costs," said Chris Williamson, Chief Economist at Markit.

In the US, Federal Reserve Chair Janet Yellen today reiterated comments to the House of Representatives Financial Services Committee that she made yesterday to the Senate Banking Committee.

She said loose monetary policy was still needed as the US economic recovery remains incomplete with many Americans still unemployed.

US industrial production rose by 0.2% in June, less than the 0.3% expected and the previous month's 0.5% growth. Manufacturing output climbed 0.1% in June, missing the forecast for a 0.3% rise. It compared to May's 0.4% gain.

Meanwhile, the European Union was expected today at a summit to cut off large-scale financing to Russia and widen sanctions against companies involved in the conflict in Ukraine.

Banco Espirito Santo

Banco Espirito Santo led Portuguese banks higher on reports the lender may raise €2bn from new shareholders to strengthen its capital ratios.

Shire declined after fresh calls from US Treasury Secretary Jack Lew for a tax crack down were seen to hurt AbbVie's takeover of the drugmaker.

Rio Tinto Group advanced as the mining company said second-quarter iron-ore production rose 11%.

Commodity producers posted the biggest gain on the Stoxx 600 following the upbeat Chinese GDP data.

Gtech SpA edged higher after agreeing to buy International Game Technology for $4.7bn.

The euro fell 0.27% to $1.3531.

Brent crude futures dropped 0.047% to $105.97 per barrel, according to the ICE.

RD

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