LONDON, Apr 30 (Reuters): European stocks rose on Tuesday, as optimism surrounding corporate earnings and merger moves eclipsed the crisis in Ukraine, while rising euro zone money market rates and strong German consumer confidence supported the euro.
Sterling also rose as investors awaited what are expected to be strong first quarter UK economic growth figures, a view backed by comments on Tuesday from Bank of England governor Mark Carney that the recovery was starting to broaden out.
Stock markets shrugged off a mixed session in Asia and remarks made by European Central Bank (ECB) president Mario Draghi to German lawmakers that further monetary easing in the form of bond-buying remains some way off.
But pressure on the ECB to act is mounting. Overnight money market rates rose to their highs of the year as excess cash in the financial system continued to fall thanks to banks paying down cheap ECB loans taken out at the height of the crisis.
"Money market developments are putting more pressure on the ECB. If rates don't come down, the ECB is bound to do something," said Jan von Gerich, chief fixed income strategist at Nordea in Helsinki.
Overnight money rates in the euro zone nudged 0.4 per cent, well above the ECB's benchmark interest rate of 0.25 per cent. This helped push the euro up 0.2 per cent on the day to $1.3878.
Sterling also rose 0.2 per cent against the dollar to $1.6840.
Draghi and other ECB officials have expressed concern in recent weeks at the deflationary impact of a strong exchange rate.
German inflation data later on Tuesday is expected to show an increase in April, ahead of euro zone figures tomorrow which are expected to rise to a still-low 0.8 per cent from a multi-year trough of 0.5 per cent.
Equities drew support from the GfK index of German consumer confidence holding at a multi-year high of 8.5 heading into May, as well as earnings reports from Finnish telecom giant Nokia and Germany's Deutsche Bank.
Nokia shares jumped 6 per cent after it unveiled plans to return $3.1 billion to shareholders via buybacks and extra dividends, while Deutsche rose 2 per cent after profit fell by nearly a third in the first quarter but still managed to beat forecasts.
At 0750 GMT the FTSE Eurofirst 300 index of leading European shares was up 0.6 per cent at 1344 points and Germany's DAX was up almost 1 per cent at 9530 points.
Britain's FTSE 100 index was up 0.5 per cent at 6735 points, and France's CAC 40 up 0.2 per cent at 4468 points.
In Asia, the MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent.
