Stocks higher after China GDP data

Wednesday 19:30 BST. Wall Street continued to recover from its recent technology-led sell-off as the latest figures on the Chinese economy, plus encouraging US economic and corporate releases, offered some much-needed reassurance to equity bulls.

Janet Yellen also helped sentiment as comments by the Federal Reserve chairwoman helped ease worries about an early rise in US interest rates.

By midday in New York, the S&P 500 equity benchmark was up 0.7 per cent, leaving it less than 2 per cent down from a record closing high set at the start of this month. The tech-heavy Nasdaq Composite was 0.9 per cent higher.

Intel shares were up 3 per cent after its quarterly earnings exceeded expectations, while Yahoo was more than 2 per cent higher after Alibaba - in which Yahoo holds a 24 per cent stake - reported strong fourth-quarter results.

Across the Atlantic, the FTSE Eurofirst 300 climbed 1.2 per cent while in Tokyo, the Nikkei 225 Average jumped 3 per cent as it pulled further away from a six-month low reached at the start of the week.

Chinese stocks initially reacted negatively to news of a slowdown in growth in the first quarter, but subsequently rallied. The Shanghai Composite index ended 0.2 per cent higher while Chinese stocks listed in Hong Kong - so-called H shares - rose 0.5 per cent.

Chinese GDP grew by 7.4 per cent in the first three months of 2014 compared to the same period a year earlier, down from 7.7 per cent in the fourth quarter and the slowest pace since late 2012 - but slightly more than many economists had expected.

Julian Jessop at Capital Economics said the data could be interpreted either positively or negatively.

"The most common reaction appears to be relief that growth has not slowed further," he said. "However, the quarter-on-quarter numbers underline the loss of momentum and there are some other worrying signs in the detail, especially in the - commodity-intensive - property sector.

"Hopes of substantial policy stimulus are also likely to be disappointed."

But Qu Hongbin, chief China economist at HSBC, said Beijing was likely to implement further "mini-stimulus" policies to stabilise growth.

"More measures are likely to be introduced in the coming months, in addition to the already-announced mini-stimulus package in early April," he said.

"Meanwhile, we believe the central bank should guide interest rates lower and prevent monetary growth from further deceleration in the coming months, so as to support investment and growth in the real economy."

There was some relief in the commodity markets that Chinese growth had not slowed as much as feared. Copper rose 1.2 per cent in London to $6,619 a tonne following a sharp slide in the previous session, while Brent crude was 27 cents higher at $109.63 a barrel. Gold was flat at $1,301 an ounce following Tuesday's $24 decline.

Meanwhile, further evidence emerged to back up the argument that weak US data releases earlier this year had been distorted by adverse weather conditions.

Industrial production rose 0.7 per cent in March, more than expected, while February's increase was revised up sharply from 0.6 per cent to 1.2 per cent.

"With retail activity having also rebounded after weather-related softness, it reinforces the message that the underlying economic story regarding the US is very positive," said James Knightley, an economist at ING.

The broad improvement in the US economy - as well as the continued equity rebound - encouraged some selling of US government bonds, and the 10-year US Treasury yield was up 1 basis point at 2.64 per cent.

The 10-year gilt underperformed, with its yield rising 4bp to 2.64 per cent, following further positive news on the UK economy.

Average earnings growth in the three months to February matched that month's annual rate of consumer price inflation, while the headline rate of unemployment fell below the 7 per cent threshold that the Bank of England originally set under its forward guidance policy for considering a rise in interest rates.

Sterling was up 0.4 per cent against the dollar at $1.6797, near its 2014 high.

The euro was a shade higher against the US currency at $1.3821 even after data confirmed a 0.5 per cent rate of inflation in the eurozone in March - adding to the pressure on the European Central Bank to ease policy further to counter the risk of deflation.

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