Factory stats help equities

Julian Harris
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STOCKS in the Eurozone started 2012 with a boost, after data showed a slower than expected fall in manufacturing activity last month.

Markit’s latest purchasing managers’ index (PMI) rose to 46.9 in the final month of last year, up from a 28-month low of 46.4 in November.

Large Eurozone economies such as Germany, France and Italy had their scores revised higher than previous estimates.

The FTSEurofirst 300 rose 1.1 per cent yesterday, the index’s highest level since late October.

However, the overall reading still indicated contraction in manufacturing activity across the single currency area. The last five months of 2011 pointed to decline, with successive PMI scores coming in below the “no change” line of 50.

And Spain’s manufacturing decline was stronger than expected in December, the figures showed, with its score being downgraded to 43.7, from 43.8.

Along with Italy and Greece, Spain saw one of the steepest overall falls in new orders from its factories, prompting more headaches for Prime Minister Mariano Rajoy (pictured).

“Spain is a particular concern,” commented Dominique Barbet of BNP Paribas.

“In absolute terms this [PMI score] is a very low level, and it has been so for the last four months -- all within a 43.7 to 43.9 tiny range.

“Moreover, things may further worsen in early 2012,” Barbet warned.