Portugal Colonial - Eurozone stock markets rally as data ignites rate-cut hope

Business activity fell in January for the eighth straight month, but the rate of decline slowed from December, a key survey showed.

The HCOB flash eurozone purchasing managers' index (PMI) published by S&P Global registered a figure of 47.9 in January from 47.6 in December. A figure below 50 indicates contraction.

In France, manufacturing and services sectors recorded steepening contractions as output fell at the sharpest rate since September. Business activity also slumped at a faster rate in Germany, the bloc's biggest economy.

- 'Good news?' -

"A bad news story is often more powerful than a good news story," noted Kathleen Brooks, research director at trading firm XTB.

"If the eurozone economy is facing a recession this year, as many expect, then the ECB can ride to the rescue, and they have room to cut interest rates."

London's benchmark FTSE 100 index also rose, but less aggressively than in the neighbouring eurozone approaching the mid-way mark.

UK business activity hit a seven-month high in January as a stronger service sector helped counteract supply disruption in the Red Sea.

S&P Global's flash UK PMI index rose to 52.5 in January from 52.1 in December. However, manufacturers saw production slump.

- Asia boost -

Elsewhere, most Asian markets rose Wednesday, with Hong Kong leading the pack for a second day following reports Alibaba's co-founders had bought huge stakes in the firm, while China announced fresh measures to boost bank lending.

The gains followed another record for the S&P 500 on Wall Street that came on the back of optimism over the US economic outlook and a positive run of earnings.

That has helped offset fading expectations the Federal Reserve will cut interest rates several times this year starting in March.

Hong Kong piled on more than three percent Wednesday, building on the previous day's gains of more than two percent.

The Hang Seng's rise was fuelled by a 7.3 percent surge in Alibaba on news that Jack Ma and Joseph Tsai had bought about $200 million worth of shares between them.

Traders were given an extra boost later Wednesday after the People's Bank of China (PBoC) said it would next month lower the amount of cash banks must keep in reserve as it looks to ramp up lending to help kick-start the stuttering economy.

The 0.5 percentage point cut in the reserve requirement ratio would pump an extra $140 billion into financial markets, the PBoC said.

On the downside, Tokyo stocks fell after Bank of Japan governor Kazuo Ueda stoked expectations it will move away from ultra-loose monetary policy.

- Key figures around 1120 GMT -

London - FTSE 100: UP 0.4 percent at 7,515.39 points

Paris - CAC 40: UP 0.8 percent at 7,450.26

Frankfurt - DAX: UP 1.2 percent at 16,823.18

EURO STOXX 50: UP 1.7 percent at 4,539.56

Tokyo - Nikkei 225: DOWN 0.8 percent at 36,226.48 (close)

Hong Kong - Hang Seng Index: UP 3.6 percent at 15,899.87 (close)

Shanghai - Composite: UP 1.8 percent at 2,820.77 (close)

New York - Dow: DOWN 0.3 percent at 37,908.45 (close)

Euro/dollar: UP at $1.0900 from $1.0854 on Tuesday

Dollar/yen: DOWN at 147.49 yen from 148.35 yen

Pound/dollar: UP at $1.2746 from $1.2687

Euro/pound: DOWN at 85.50 pence from 85.55 pence

West Texas Intermediate: UP 0.7 percent at $74.92 per barrel

Brent North Sea Crude: UP 0.6 percent at $80.01 per barrel

L.Carrico--PC