European stocks rose for a third day continuing the bull market, as data showed that the Purchasing Managers' Index in the manufacturing sector and services in China were relatively strong in 2016.

The activity index of the manufacturing sector of China's economy by Caixin, also published by Markit Economics, in December was 51.9, higher than the previous value of 50.9 and economists' forecast of 50.7. As can be seen from the data, the index increased by 0.1 points and reached the highest level since January 2013. Chief Economist at Caixin Shenchzhun Zheng said that in December there was the development of positive trends in the Chinese economy, the majority of sub-indices show positive trends. However, he noted that despite the improvement of the situation, the Government of China need to remain vigilant to ensure the stability of the economy.

UK manufacturing sector expanded at the fastest pace in 30 months in December, showed on Tuesday the results of the survey by IHS Markit. PMI rose to 56.1 in December from 53.6 in November. The score was significantly higher than its long-term average of 51.5 and the expected level of 53.3.

PMI indicates expansion in each of the past five months. The study showed that in December, growth in production and new orders were among the best that have seen over the past two and a half years. Manufacturers benefited from a strong influx of new orders from domestic and overseas customers. Employment increased for the fifth consecutive month in December, while the job creation has accelerated the most in 14 months. On the price front, selling prices remained among the fastest throughout the survey history.

"Based on its historical connection with official data on industrial production, the survey indicates that the quarterly growth rate of close to 1.5 per cent, showing a surprisingly robust pace, given the weak start of the year and the uncertainty surrounding the referendum on EU membership," said Rob Dobson, senior economist at IHS Markit.

Banking stocks were the best performers, having jumped more than 1.3 percent. Shares of the new merged bank BPM in Italy have been at the top of the European index of the second day in a row, rising by more than 6 per cent in mid-morning trading. Italian banking index moves up, despite news that the sale of three small banks could be in jeopardy after the European Commission asked to postpone the process, at least for a week.

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