VIENNA (dpa-AFX) - The European markets ended Thursday's session with modest gains. The markets pared their gains after the ECB and the BoE both maintained their respective interest rates. With the central bank decisions out of the way, investors will now turn their attention to Friday's U.S. jobs report for February.
The European Central Bank maintained status quo in March amid rising concerns the political stalemate in Italy could kindle the Eurozone sovereign debt crisis as the bloc battles a recession. The main refinancing rate was held at 0.75 percent after the meeting of the Governing Council in Frankfurt on Thursday, in line with economists' expectations. The central bank also maintained its deposit rate unchanged at zero and the marginal lending facility rate at 1.50 percent.
European Central Bank President remained optimistic of a recovery in the recession-hit euro area economy later this year even as the central bank staff cut their projections.
Speaking at the post-decision press conference in Frankfurt, Draghi said, 'Later in 2013 economic activity should gradually recover, supported by a strengthening of global demand and our accommodative monetary policy stance.'
Draghi played down the effect of the Italian stalemate, saying that markets have returned to the pre-election levels. He also said many of the fiscal reforms implemented by the previous government are continuing on 'auto pilot'. Italian bond yields had risen soon after the election results.
The central bank chief also said that the policymaking body known as the Governing Council did discuss a rate cut today. Today's decision to hold rates steady was the 'prevailing consensus', he added.
With the intent to bring down inflation, the Bank of England kept its quantitative easing and interest rates unchanged despite the economic picture remaining dismal. Policymakers decided on Thursday to retain the size of the asset purchase programme at GBP 375 billion and the interest rate at a record low 0.50 percent.
Spain raised EUR 5 billion at lower costs from a debt sale on Thursday, despite political stalemate in Italy hurting investor sentiment. The Treasury sold EUR 5 billion from the auction of debt securities, in line with its maximum target.
The yield on 10-year benchmark bonds dropped to 4.917 percent from 5.202 percent at the prior issue on February 21. Likewise, the borrowing cost of 5-year debt fell to 3.572 percent from 4.123 percent on February 7 and the two-year bond yield declined to 2.632 percent from 2.713 percent on January 17.
The British Chamber of Commerce (BCC) on Thursday lowered its growth forecast for the U.K. economy, citing the fourth quarter's unexpected GDP contraction and worsening global growth prospects, mainly in the Eurozone. The business group, however, expects the prospects for the economy to improve gradually in the medium term.
The estimate for this year has been lowered to 0.6 percent from the earlier forecast of 1 percent. In 2014, the economy is expected to grow 1.7 percent, slightly slower than the 1.8 percent growth estimated in December. In 2015, growth is expected to accelerate to 2.2 percent, but the recovery is expected to be slow by historical standards.
Portugal's rating outlook was raised by Standard & Poor's on Thursday, as the nation is likely to get extended support from its European lenders. The rating agency affirmed Portugal's 'BB' long-term rating on Thursday, while raising the outlook to stable from negative.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.32 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.03 percent.
The DAX of Germany climbed by 0.26 percent and the CAC 40 of France advanced by 0.53 percent. The FTSE 100 of the U.K. rose by 0.18 percent and the SMI of Switzerland gained 0.13 percent.
In Frankfurt, Adidas climbed by 6.74 percent. The sports goods giant sees growth in earnings and revenue in 2013.
Merck KgaA's fourth-quarter profit more than doubled from last year and the drug-maker expects higher profit and sales in 2013 as well as 2014. The stock advanced by 2.93 percent.
Continental increased by 4.26 percent, after reporting strong annual results.
SAP gained 0.55 percent, after HSBC upgraded the stock to 'Overweight' from 'Neutral.'
Hannover Rueckversicherung, which lifted its dividend, rose by 2.53 percent.
Credit Suisse raised HeidelbergCement to 'Neutral' from 'Underperform.' The stock finished down by 0.30 percent.
Linde dipped by 1.10 percent, after reporting annual results.
Daimler declined by 2.07 percent, after a broker downgrade.
STADA Arzneimittel gained 2.71 percent. Berenberg upgraded the stock to 'Buy' from 'Hold.'
Klöckner dropped by 4.70 percent, after Exane BNP reduced its rating on the stock.
In Paris, supermarket chain Carrefour, which reported higher annual profit, surged by 2.88 percent.
Credit Agricole and BNP Paribas fell by 0.68 percent and 0.38 percent respectively, while Societe Generale lost 0.61 percent.
In London, temporary power provider Aggreko reported higher profit and revenue for the year and increased its dividend. The stock surged by 10.30 percent.
Goldman Sachs upgraded Antofagasta to 'Neutral' from 'Sell.' The stock gained 0.56 percent.
Insurer Aviva, which cut dividend, sank by 12.51 percent. Peer Standard Life lost 0.32 percent.
IMI climbed by 4.52 percent, after announcing an 8 percent increase in its full year dividend.
Schroders gained 2.46 percent, following a dividend increase.
Petropavlovsk plunged by 8.50 percent. Nomura downgraded the stock to 'Reduce' from 'Buy.'
Nestle increased by 1.36 percent in Zurich, after Credit Suisse upgraded the stock to 'Outperform' from 'Neutral.'
German manufacturing orders decreased unexpectedly in January, as demand in the Eurozone weakened amid the deepening debt crisis, indicating that the recovery in Europe's largest economy is losing momentum.
New orders received by Germany manufacturers decreased 1.9 percent in January from a month ago, after adjusting for seasonal variations and inflation, data from the Federal Ministry of Economics and Technology showed Thursday. Economists had forecast orders to increase 0.6 percent following the 1.1 percent increase in December.
Unemployment rate in France rose more than expected to reach its highest level in more than 13 years in the fourth quarter of 2012, data from statistical office Insee showed Thursday. The overall unemployment rate rose to 10.6 percent in the fourth quarter from a downwardly revised 10.2 percent in the third quarter. This was the highest rate recorded since the second quarter of 1999, when the jobless rate was 10.7 percent. Economists expected an increase in the rate to 10.5 percent.
France's merchandise trade deficit increased from the previous month in January, defying economists' forecast for a decline, latest data showed Thursday. The trade deficit increased to EUR5.86 billion in January from EUR5.42 billion in December, the customs office said. Economists had forecast the shortfall to drop to EUR4.7 billion. In January 2012, the balance was a deficit of EUR5.59 billion.
With the value of imports rising and the value of exports falling, the Commerce Department released a report on Thursday showing that the U.S. trade deficit widened by more than economists had anticipated in the month of January.
The Commerce Department said the trade deficit widened to $44.4 billion in January from a revised $38.1 billion in December. Economists had expected the deficit to widen to $43.0 billion from the $38.5 billion originally reported for the previous month.
Labor productivity in the U.S. fell by slightly less than previously estimated in the final three months of 2012, according to a report released by the Labor Department on Thursday.
The report said productivity fell by 1.9 percent in the fourth quarter compared to the preliminary estimate of a 2.0 percent decrease. Economists had expected the size of the drop to be revised to 1.6 percent.
The Labor Department also said unit labor costs increased by a revised 4.6 percent in the fourth quarter compared to the previously reported 4.5 percent increase. Economists had expected the increase in labor costs to be downwardly revised to 4.4 percent.
First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended March 2nd, according to a report released by the Labor Department on Thursday. The report said initial jobless claims fell to 340,000, a decrease of 7,000 from the previous week's revised figure of 347,000.
The drop in jobless claims came as a surprise to economists, who had expected claims to rise to 355,000 from the 344,000 originally reported for the previous month.
Copyright(c) 2013 RTTNews.com. All Rights Reserved
Copyright RTT News/dpa-AFX
© 2013 AFX News
