By NINA BAINS
European stocks rebounded Tuesday from a sharp selloff in the previous session, as decent service-sector activity in the U.S., the euro zone and China helped to soothe frayed nerves.
The Stoxx Europe 600 index rose 0.6% to 285.56. The U.K.'s FTSE 100 index gained 0.6% to 6282.76, Germany's DAX advanced 0.4% to 7664.66 and France's CAC-40 added 1% to 3694.70.
Greece's ASE Composite index jumped 1.7% to 1011.85, helped higher by a well-received treasury-bill auction.
Italy's FTSE Mib advanced 1.1% to 16712.26, after a 4.5% slide Monday. And Spain's IBEX-35 gained 2.2% to 8093.60, bouncing back from a 3.8% drop Monday.
Business activity in the euro zone shrank at its least severe rate in 10 months in January, helped by solid growth in Germany. The measure of activity in the services sector for the euro zone rose to 48.6 in January from 47.2 in December, according to Markit's Composite Purchasing Managers' Index, an improvement from the preliminary reading released last month. Figures below 50 indicate contraction.
Meanwhile, the measure of Spain's services sector also improved, to 47.0 in January from 44.3 in December.
The euro rose to a fresh high for the day above $1.35, as the data eased investors' nerves following the market rout seen in the previous session on worries of political instability in Spain and Italy.
"The further easing in the rate of contraction in services activity in January reported by the purchasing managers is very welcome news," said Howard Archer, chief European and U.K. economist at IHS Global Insight. "With the corresponding manufacturing survey also improving, it adds to the evidence that euro-zone economic activity bottomed out around last October."
European stocks briefly dipped on data that showed retail sales in the euro area fell sharply in December, the largest month-on-month decline since April 2012 and the worst drop since February 2009 in annualized terms.
In the U.S., data showed that the nonmanufacturing sector remained in expansion territory last month while beating forecasts. And in China, nationwide service-sector activity as measured by the HSBC China Services Purchasing Managers' Index rose to 54.0 in January from 51.7 in December.
Banks were among the biggest gainers following heavy losses Monday. In Madrid, Banco Santander (SAN.MC)
BP advanced 1.4% after the U.K. oil giant reported profit of $3.98 billion for the fourth quarter, topping expectations.
Shares of U.K. cable-television and Internet provider Virgin Media (VMED)
U.K.-based chip designer ARM Holdings (ARM.LN)
Shares in Dutch telecommunications company KPN (KPN.AE) NV
Write to Nina Bains at firstname.lastname@example.org