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 European stocks held near a 14-month high on Tuesday, following better-than-expected Chinese economic data, while Sterling rose after wage growth numbers also exceeded forecasts and supported expectations for a further Bank of England rate rise.

Europe's broad STOXX 600 index rose 0.3%, trading just shy of its highest level since Feb 2022 hit a day earlier. It was kept in positive territory by European banking stocks that gained 1.4% ahead of results from U.S. big beasts Goldman Sachs and Bank of America later in the day.

A combination of cheap valuations, signs that China's reopening is boosting European firms, a weak dollar and softening inflation have supported European shares in recent months.

U.S. S&P 500 futures rose 0.3%.

China's economy grew 4.5% year-on-year for the first quarter, eclipsing the expectations of most economists, data released on Tuesday showed.

That helped China's yuan, the China-exposed Australian and New Zealand currencies and onshore Chinese blue chip stocks to strengthen, but the patchiness of the recovery meant gains were not universal. Hong Kong and Australian share benchmarks both fell.

Separate data on Chinese activity, also released on Tuesday, showed factory output speeding up but missing expectations while fixed asset investment growth unexpectedly slowed.

"The headline number is a positive surprise and overall it's a good set of numbers, albeit uneven, and that is reflected in the markets' response," said David Chao, global market strategist for Asia Pacific at Invesco.

"The thesis the market has that China is exiting the pandemic and growth will be driven by consumption is still intact. While the recovery is on track, I don't think economic growth from what we have seen so far is exceeding expectations too much."

Chao said weaker property investment during the quarter showed the trouble-prone sector had not recovered and could again hold back China's economic growth this year.

An index of Hong Kong-listed Chinese property firms dipped 1.4%.

EYES ON BANK OF ENGLAND

In Europe, Britain's unemployment rate rose unexpectedly in the three months to February but pay growth stayed higher than forecast, underscoring concerns about the stickiness of inflation in Britain and expectations that the Bank of England will have to continue raising interest rates.

That sent the pound higher and it was last up 0.52% against the dollar at $1.2442 heading back towards last week's 10-month high, and also a touch stronger versus the euro. [GBP/]

"The data, or at least the earnings part, was a bit stronger than expected, even if the headline numbers were a touch weaker, and it certainly seemed to underpin the market's perception that the Bank of England will tighten policy again," said Jane Foley head of FX strategy at Rabobank.

She said that had pushed the pound higher and "it brings home the risks that the Bank of England could go not once but twice".

The euro rose 0.46% against the dollar to $1.09775, also heading back towards last week's 14-month top.

European and longer dated U.S. government bond yields continued to rise. German benchmark 10 year yields reached 2.502%, their highest since 15 March. The 10-year Treasury yield reached 3.608% matching the previous day's around three-week high. [GVD/EUR]

Elsewhere, Australia's central bank considered hiking rates for an 11th time in April before deciding to pause, but was ready to tighten further if inflation and demand failed to cool, minutes of the Reserve Bank of Australia's April meeting showed