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European stocks jump as German investor sentiment soars

European stocks rallied on Tuesday, propelled by news of soaring investor sentiment in eurozone powerhouse Germany.

London's FTSE 100 index of leading companies rose 0.96 percent to 6,379.07 points, while Frankfurt's DAX 30 soared 1.62 percent to 7,752.45 points, and Paris's CAC 40 jumped 1.88 percent to 3,735.82 points.

Madrid's IBEX 35 index climbed 1.39 percent and Milan's FTSE MIB added 1.58 percent.

In foreign exchange activity, the European single currency climbed to $1.3380 from $1.3351 late in New York on Monday.

The dollar dipped to 93.61 yen from 93.96 yen, while the euro dropped to 125.26 yen from 125.45 yen.

Gold prices meanwhile dipped to $1,607.75 an ounce from $1,610.75 on the London Bullion Market.

CMC Markets Analyst Michael Hewson said: "Europe's markets have been given a timely lift from the latest German ZEW data for February which came in at a three year high as German investors continued to become more confident about the likelihood of a bounce back in the German economy..."

The widely watched investor confidence index calculated by the ZEW economic institute soared to 48.2 points in February from 31.5 points in January. That was its highest level since April 2010.

The reading beat market expectations for a much more modest increase to just 35 points this month, stoking hopes that the eurozone could edge towards economic recovery this year.

"This is just the latest in a long list of surveys out of the eurozone which suggest 2013 is going to be the year when the region bottoms out and begins the move back towards recovery," said Alpari trader Craig Erlam.

However, he added: "We should not get too carried away with the data though, while these surveys are positive, we are yet to see any hard data to confirm that worst is actually behind us.

"Once this starts to make its way out, I think we could see the start of the next phase of the equity rally, not to mention the euro's ascent back towards $1.40."

-- Danone and Intercontinental --

On the company news front, Danone shares rallied 5.90 percent to 53.15 euros in Paris after the French food group said it would axe about 900 jobs or ten percent of its managerial staff in Europe and posted flat 2012 net profits.

Danone added that the job cuts would be achieved by relocation within the company and through voluntary departures.

In London, InterContinental Hotels Group shares fell 1.81 percent to 1,953 pence, despite news that annual profits jumped by almost a fifth, aided by strong expansion in China and the US.

In earlier Asian deals, markets traded mostly lower on Tuesday as Tokyo slipped following an uptick in the yen while Chinese shares fell on fears Beijing may act to rein in soaring property prices.

Tokyo's benchmark Nikkei 225 lost 0.31 percent on profit-taking and as the yen rose after Japan's finance minister said the central bank's independence was safe for now.

Hong Kong meanwhile slid 1.02 percent and Shanghai dived 1.25 percent, led by falls in property stocks amid fears Beijing may tighten regulations in the sector to try to control home prices.

US stocks were trading higher in midday trade, with the Dow Jones Industrial Average up 0.36 percent to 14,032.38 points.

The broad-based S&P 500 rose 0.47 percent to 1,526.98 points, while the tech-rich Nasdaq Composite increased 0.33 percent to 3,202.64 points.