European Stocks Recover ahead of Key German Data

European stocks picked up in the early trading minutes as investors looked to buy back into shares after the previous session's sharp declines ahead of key German data.

The pan-European FTSEurofirst 300 index added 0.4 percent to 1,155.97. The UK's FTSE 100 gained 0.2 percent while France's CAC-40 gained 0.6 percent.

Germany's DAX and Spain's IBEX was up 0.4 and 0.5 percent respectively. In Italy, the FTSE MIB gained 0.4 percent.

The single currency firmed against the dollar, trading at about $1.32.

Stocks had closed lower in the previous session as various eurozone indicators, including the bloc's manufacturing and service purchasing managers index (PMI) pointed to stagnating economic conditions.

German IFO business climate index is set for release during the day, which would reveal the business sentiments in the eurozone's biggest economy.

According to a Reuters poll of economists, the data could show improvement, rising to 105 from 104.2 in January. The country's fourth-quarter Gross Domestic Product (GDP) figures released early in the day had confirmed that growth contracted 0.6 percent, dragged down by weak foreign trade.

Concerns over the Italian political conditions continue to remain unabated as the recession-stricken country goes to polls this weekend. Italy's FTSE MIB was the worst performer in the previous session, tumbling about 3 percent as markets remain wary of the outcome.

Campaigns had gathered momentum in the recent weeks, with Pier Luigi Bersani seen as the front runner, followed by the center-right Silvio Berlusconi. Bust traders fear that even if Bersani manages to win the polls, his chances at setting up a stable coalition remains doubtful. Technocrat Mario Monti, who is considered to be in third place, could be the person Bersani looks to form a coalition with.

The European Commission's winter economic forecast for 2013 which will include Gross Domestic Product (GDP) and deficit outlook for the bloc's countries is also set to be released during the day. Later in the day, the French Finance Minister Pierre Moscovici is planning to hold a news conference to consider the country's growth targets.

Asian markets had ended with a mixed report earlier as the previous day's weak eurozone indicators weighed on economic sentiments across the region.

Japan's Nikkei average index gained 0.68 percent to 11385.9 while Australia's S&P/ASX 200 climbed 0.76 percent to 5018.1. South Korea's benchmark KOSPI gained 0.18 percent to 2018.8.

China's Shanghai Composite Index fell 0.51 percent to 2314.2. Hong Kong's Hang Seng index was down 0.43 percent to 22807.8 towards close.

Chinese market sentiments dampened after official figures showed that new home prices in most of the government-tracked cities rose in January, sparking fresh price-curb concerns.

Real estate prices, which have accelerated at a more-than-anticipated rate since the recent economic recovery have become a major cause of concern for the Communist government. The sector is crucial to economic growth as it directly contributes to about 10 percent of the GDP.

Japanese stocks reversed early losses as the yen returned its downward spiral against the dollar ahead of the likely announcement of Bank of Japan's new chief next week. The dollar climbed about 0.2 percent to trade at 93.32 yen.

Australian stocks pulled back from the previous session's losses as Reserve Bank of Australia governor Glenn Stevens said that there was a good deal of interest rate stimulus in the pipeline.