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LONDON, Aug 13 AFP

August 13 2013, 9:32PM

European stock markets have risen and the euro has gained against the US dollar in reaction to upbeat eurozone data, while share prices were boosted by a strong showing in Tokyo.

London's FTSE 100 index on Tuesday climbed 0.63 per cent to stand at 6,616.02 points nearing midday in the British capital.

Frankfurt's DAX 30 advanced 0.79 per cent to 8,425.25 points and the CAC 40 in Paris won 0.30 per cent to 4,083.86 compared with Monday's closing values.

"It's been a bright start to the day so far in Europe, with more data suggesting the recovery in the eurozone is finally under way," said Craig Erlam, market analyst at Alpari traders.

"Of course, any recovery is going to be extremely fragile, but compared to the last couple of years, it's very encouraging."

Industrial output in the 17-nation eurozone bounced back sharply in June, another pointer that the single currency bloc is finally edging out of recession, official data showed on Tuesday.

With overall growth figures for the second quarter due on Wednesday expected to show a switch out of recession, eurozone industrial production in June output jumped 0.7 per cent from May when it fell 0.2 per cent.

Separate data showed that investment sentiment in Germany rose more than expected in August.

The widely watched investor confidence index calculated by the ZEW economic institute rose by 5.7 points to 42.0 points in August, beating analysts' forecasts for an increase to about 40 points this month.

The euro gained in reaction to $US1.3305 from $US1.3299 in New York late on Monday.

The US dollar advanced to Y97.91 from Y96.87 on Monday.

Sterling steadied against both the European single currency and the US dollar following official data that showed a slight drop in British inflation.

On the London Bullion Market, the price of gold fell to $US1,336.10 an ounce from $US1,341 on Monday.

In Paris, shares in Societe Generale bank fell by 1.81 per cent after co-operative insurance company Groupama announced that it would soon sell its remaining stake in the bank, worth about 530 million euros ($A776.78 million).

Asian stock markets closed higher on Tuesday, with Tokyo lifted by a weaker yen that in turn makes Japanese exports more competitive.

Tokyo jumped 2.57 per cent by the close after slipping on Monday following disappointing Japanese growth figures - and ahead of fresh numbers that will give an indication of the strength of the US economy.

Figures for US retail sales, housing and industrial production due this week will give clues as to whether the Federal Reserve could begin to taper its huge $US85 billion a month quantitative easing program which has buoyed international markets in recent months.

Wall Street closed flat on Monday with the Dow Jones Industrial Average slipping 0.04 per cent.

European stock markets had closed mixed on Monday as investors kept their positions amid heightening concerns of yet another Greek bailout, dealers said.