European stocks firm despite global economic woes

European stock markets rose slightly on Wednesday after suffering stiff losses early in the week, as gloomy economic news was offset by upbeat earnings statements by some European blue-chips, analysts said. London's benchmark FTSE 100 index inched up 0.04 percent to 5,501.42 points in afternoon trade off earlier highs following dire news that Britain's recession deepened in the second quarter of 2012. British gross domestic product slumped by a worse-than-expected 0.7 percent in the three months to June, according to official data published just ahead of the London Olympics. Elsewhere, the Paris CAC 40 gained 0.03 percent to 3,075.47 points and Frankfurt's DAX 30 rose 0.32 percent to 6,410.92 points as investors set aside news of sliding German investor confidence. Italian and Spanish markets rebounded sharply, clawing back some of their recent losses suffered on eurozone debt crisis concerns. Milan jumped 1.17 percent and Madrid added 0.60 percent. "Earnings from leading European blue-chips have helped the positive bias today, with auto stocks outperforming the wider market," at least in Germany, ETX Capital Market analyst Ishaq Siddiqi wrote. In foreign exchange deals, the euro climbed to $1.2149 from $1.2063 in New York late Tuesday, when it had tumbled to a two-year low at $1.2043. US stocks opened higher on Wall Street as investors digested strong earnings reports from Dow members Boeing and Caterpillar and disappointing results from Apple. In early trading, the Dow Jones Industrial Average of 30 blue-chip stocks points was up 0.76 percent to 12,713.02. The S&P 500-stock index advanced 0.30 percent to 1,342.32 while the tech-rich Nasdaq was stable at 2,863.53. Asian stock markets closed lower on Wednesday as investors played catch-up with Tuesday's poor European and US performance amid growing fears Spain would need a full bailout. Japanese shares were also hurt by news the country had posted a record trade deficit in the first six months of the year as energy costs soared and exports to key markets tumbled while the strong yen also weighed. Tokyo closed down 1.44 percent, Seoul fell 1.37 percent and Sydney lost 0.23 percent. Hong Kong retreated 0.14 percent and Shanghai dipped 0.49 percent as tech stocks were hit by Apple's results. All eyes remain firmly on Europe, where Madrid remains in focus as its borrowing costs for benchmark 10-year bonds fell to 7.4020 percent on Wednesday, still well into the danger zone for long-term funds. The figure is around the levels that forced Greece, Ireland and Portugal to seek bailouts. For Germany, the Ifo economic institute said Wednesday that business confidence dropped for the third month in a row in July as companies grew increasingly pessimistic about the fallout from the eurozone debt turmoil. The closely-watched Ifo business climate index dropped to 103.3 points in July from 105.2 points in June, a slightly steeper decline than expectations. But German automakers raced ahead meanwhile, with Daimler shares showing a gain of 4.04 percent to 37.59 euros, BMW up by 1.34 percent at 55.92 and VW adding 1.40 percent to 133.85. In France the picture was quite different, as shares in PSA Peugeot Citroen slumped by 3.25 percent to 6.037 euros after unveiling first half figures that included a net loss of 819 million euros ($989 million).