European stock markets rebound

London -European stock markets rebounded slightly on Tuesday in the wake of mixed eurozone economic data, traders said.

Indices had retreated Monday despite encouraging manufacturing figures from China, as market attention focused on the US economy.

London's FTSE 100 index edged up 0.11% to stand at 6 564.36 points in midday deals Tuesday.

Frankfurt's DAX 30 rose 0.13% to 8 646.84 points and the CAC 40 in Paris climbed 0.49% to 4 192.59.

"Investors reacted favourably to the German Ifo release this morning, despite the headline figure falling short of expectations," said Craig Erlam, market analyst at Alpari traders.

The Ifo economic institute's closely watched business climate index rose for the fifth month in a row in September, inching up to 107.7 points from 107.6 points in August.

Business confidence in Germany is continuing to rise, albeit slowly, suggesting that the burgeoning recovery in Europe's biggest economy is on track even if it could prove sluggish.

German Chancellor Angela Merkel was meanwhile reaching out to her centre-left rivals on potentially forming a coalition government after romping to victory in elections that banished her preferred allies.

Voters cemented Merkel as the world's most powerful female political leader, handing her conservatives close to an absolute majority at the weekend after a campaign focused on her image as a safe pair of hands through Europe's financial turmoil.

Elsewhere in the eurozone, Spain has emerged from recession in the third quarter, with estimated economic growth of 0.1 to 0.2%, Prime Minister Mariano Rajoy said in a newspaper interview Tuesday.

Spain, the eurozone's fourth-biggest economy, is reeling from a double-dip recession brought on by the bursting of a housing bubble in 2008.

Madrid's IBEX 35 stocks index was up 0.40% at 9 146.2 points in Tuesday trading.

In the foreign exchange deals, the European single currency dipped to $1.3489 from $1.3491 late in New York on Monday. The dollar climbed to ¥98.92 from ¥98.84.

On the London Bullion Market, the price of gold slipped to $1 316.50 an ounce from $1 323 on Monday.

The aviation sector was in focus as Airbus predicted that the world would need more than 29 000 new commercial planes over the next 20 years to respond to higher traffic and replace older models.

Delivering its 20-year outlook, the European aircraft maker said air travel through 2032 will be fuelled by traffic to and from emerging markets such as Brazil, China and India.

Shares in Airbus parent group EADS were up 0.37% at €46.18.

Asian stock markets ended lower on Tuesday following losses on Wall Street overnight, as attention turned to a brewing budget row in Washington that threatens to shut down parts of the US economy.

With the fiscal year ending on September 30, US lawmakers are unable to reach a compromise on the budget. President Barack Obama is refusing to agree to Republican demands that would see huge cuts to his landmark healthcare law.

Should they fail to find a compromise several government agencies will close on October 1, putting hundreds of thousands of non-essential staff on unpaid leave.

Obama is also facing another battle to raise the country's debt ceiling as the government is expected to run out of cash in the middle of next month, meaning it could default on its repayment obligations.

A similar standoff in 2011 sent global markets slumping and led to the historic downgrade of the US sovereign debt rating.