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European Markets Largely Finished Higher Despite U.K. Weakness

The European markets largely closed to the upside on Thursday, with the exception of the FTSE 100 of the U.K. The weakness in the U.K. was caused by a downgrade of the country's credit rating by Fitch. A slew of economic reports released by the U.S. helped to provide support to the markets in the afternoon.

Fitch Ratings downgraded the UK's credit rating outlook to 'negative' from 'stable', citing the economy's vulnerability to adverse economic shocks due to high indebtedness and weak economic outlook. At the same time, Fitch affirmed the country's long-term foreign and local currency Issuer Default Rating as well as country ceiling at AAA. The rating firm said that this reflected the progress made in reducing the government's structural budget deficit and the credibility of the fiscal consolidation effort.

The Euro Stoxx 50 index of eurozone bluechip stocks climbed by 0.69 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, finished higher by 0.19 percent.

The DAX of Germany increased by 0.94 percent and reached its highest level since August. The CAC 40 of France gained 0.44 percent and the SMI of Switzerland rose by 0.44 percent. The FTSE 100 of the U.K. declined by 0.15 percent.

The European Automobile Manufacturers' Association said new car registrations dipped 9.7 percent in February from a year ago, after easing 7.1 percent in January. BMW rose by 0.19 percent in Germany. Daimler finished up by 0.56 percent, while Volkswagen dipped by 0.11 percent. In Paris, Renault fell by 1.31 percent and Peugeot lost 0.57 percent.

In Frankfurt, K+S surged by 7.30 percent after it reported the second-best result in the company's history. The specialty fertilizer firm reported nearly a 23 percent increase in fourth-quarter profit and increased its dividend by 30 percent.

HeidelbergCement gained 5.06 percent, after the company reported a higher annual profit and raised its dividend. The company also expects to report a higher profit in 2012 and increased the savings target from its efficiency improvement program.

Aixtron jumped by 14.67 percent, after Deutsche Bank upgraded the stock to "Buy" from "Hold."

Lufthansa fell by 1.09 percent, after stating that its profit for the current year could be hurt again by weak the economy and high fuel costs.

Bayer finished lower by 0.22 percent, after JPMorgan downgraded the stock to "Neutral" from "Overweight."

In Paris, shares of Pernod Ricard fell by 1.70 percent. GBL, a Belgian holding company, announced that it will sell up to 6.2 million shares of Pernod Ricard.

In London, Tesco dropped by 0.89 percent. The company said Richard Brasher, chief executive officer of its UK operations, will step down from the board immediately and would leave the company in July.

Home Retail fell by 0.96 percent. The company said its second-half like-for-like sales fell 8.7 percent at Argos and declined 3.7 percent at Homebase. However, the company expects benchmark profit before tax for the year in-line with current market expectations.

In economic news, Eurostat reported Thursday that the number of employed persons in Eurozone fell 0.2 percent sequentially in the fourth quarter, wiping out the third quarter's 0.2 percent increase. The largest sequential fall in employment was recorded in construction and the highest increase in real estate activities.

New unemployment claims in the U.S. for the week ended March 10th fell to a lower level than most economists had expected, according to figures released Thursday by the Labor Department. New jobless claims came in at a seasonally adjusted level of 351,000, a drop of 14,000 from the previous week's revised level of 365,000. Economists had expected claims to come in at 355,000.

U.S. producer prices increased slightly less than expected in February, according to figures released Thursday by the Labor Department. The producer price index increased by 0.4 percent, which was bigger than the 0.1 percent increase reported for January, but was below the 0.5 percent increase predicted by most economists.

The New York Fed said its general business conditions index rose to 20.2 in March from 19.5 in February, with a positive reading indicating growth in the manufacturing sector. The increase surprised economists, who had expected the index to drop to a reading of 17.5.

The Federal Reserve Bank of Philadelphia reported Thursday that its diffusion index of current activity rose to 12.5 in March from 10.2 in February. Economists had been expecting the index to edge up to a reading of 11.5. The bigger than expected increase lifted the index to its highest reading since April of last year.

by RTT Staff Writer

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