The European markets generally ended Wednesday's session with some modest gains. Bank stocks continued to weigh on the markets, a trend that has continued since the beginning of the trading week. Comments on the state of the European financial situation by Fed Chairman Bernanke in the afternoon were closely watched, as well as the budget speech by George Osborne in the U.K.
The U.K. economy is likely to avoid a technical recession and is seen expanding faster than expected earlier, Chancellor George Osborne said in his budget speech on Wednesday. Osborne said the Office for Budget Responsibility has revised up its growth forecast for the U.K. economy this year to 0.8 percent from the November estimate of 0.7 percent. The economy is seen expanding faster at 2 percent next year, 2.7 percent in 2014 and 3 percent in both 2015 and 2016.
Osborne also announced wide-ranging reforms to the tax system to reward work and support growth, cutting the "uncompetitive" top rate of tax from 50p to 45p, and reducing the corporate tax.
U.S. Federal Reserve Chairman Ben Bernanke, in his testimony before Congress Wednesday, stated that Europe's financial economic situation remains difficult. Bernanke also stated that the European banking system needs further strengthening.
Bank stocks were weak again Wednesday, extending losses from the beginning of the week. In the U.K., Royal Bank of Scotland Group fell by 0.38 percent. Lloyds Banking Group dropped by 0.90 percent and Barclays finished down by 0.33 percent. In Germany, Commerzbank closed lower by 0.21 percent and Deutsche Bank decreased by 0.24 percent. In France, Societe Generale declined by 1.81 percent. Credit Agricole fell by 1.29 percent and BNP Paribas finished lower by 0.86 percent.
The Euro Stoxx 50 index of eurozone bluechip stocks finished down by 0.28 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, climbed by 0.07 percent.
The DAX of Germany climbed by 0.23 percent and the FTSE 100 of the U.K. gained 0.25 percent. The CAC 40 of France fell by 0.10 percent and the SMI of Switzerland lost 0.10 percent.
Daimler finished up by 0.39 percent. Citigroup placed the stock on its "Strategy most favored" list.
Continental was also placed on Citigroup's "Strategy most favored list." The stock closed higher by 1.26 percent.
Adidas fell by 2.32 percent, after Morgan Stanley downgraded the stock to "Underweight" from "Equalweight."
Shares of Metro dropped by 3.02 percent, after HSBC downgraded the stock to "Underweight" from Neutral.
Gildemeister climbed by 3.12 percent. HSBC upgraded the stock "Overweight" from "Neutral."
Brenntag fell by 0.77 percent. The company said it plans to grow all relevant earnings parameters in 2012.
Bilfinger Berger dipped by 0.34 percent, after confirming its earnings outlook for 2012.
In Paris, Cap Gemini climbed by 3.13 percent. Societe Generale upgraded its rating on the stock to "Buy" from "Hold."
In London, Sainsbury closed higher by 4.52 percent. The company reported higher sales for the fourth quarter.
Eurasian Natural Resources dropped by 3.01 percent. The company reported a lower pre-tax profit for 2011 and trimmed its dividend, but projected higher demand for 2012 despite the market remaining volatile.
Vodafone Group advanced by 0.29 percent. Goldman Sachs added the stock to its conviction buy list.
In economic news, Germany's leading economic indicator increased for the second straight month in January, data from a survey by the Conference Board showed Wednesday. The leading economic index increased 0.3 percent from the previous month to 103.8 in January, after recording 0.7 percent growth in December.
After reporting a substantial increase in U.S. existing home sales in January, the National Association of Realtors released a report on Wednesday showing a modest pullback in existing home sales in February. Existing home sales slipped 0.9 percent to a seasonally adjusted annual rate of 4.59 million in February, from an upwardly revised 4.63 million in January. Economists had expected existing home sales to edge up to 4.61 million from the 4.57 million that had been reported for the previous month.
by RTT Staff Writer
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