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European Markets Turned Positive Heading Into The Weekend

The European markets halted a 3 session decline on Friday after Eurozone finance ministers agreed to boost the firewall. The better than expected U.S. consumer sentiment results also provided support in the afternoon. Bank stocks finished with gains for the first time this week. Mining and steel stocks were also a source of strength Friday, as well as automakers and cyclicals.

Eurozone finance ministers decided to raise the combined size of the region's bailout funds to prevent the possible spillover of the debt crisis in some member states. The ceiling for lending by the European Stability Mechanism (ESM) and European Financial Stability Facility (EFSF) will be increased to EUR 700 billion, the Eurogroup, which represents euro area finance ministers, said in a statement on Friday.

After today's move, the maximum lending volume of ESM is envisaged at EUR 500 billion by mid-2013. The combined lending ceiling of the ESM and the EFSF will continue to be set at EUR 700 billion, the statement said. Further, Eurozone members have committed to provide EUR 150 billion additional bilateral contributions to the International Monetary Fund.

The Spanish government also announced its proposed budget on Friday. The government plans to cut the country's deficit to 5.3 percent of GDP. The budget includes EUR17.8 billion in government spending cuts. The budget will be discussed in parliament on Tuesday.

The Euro Stoxx 50 index of eurozone bluechip stocks climbed by 1.06 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, increased by 0.79 percent.

The DAX of Germany gained 1.04 percent and the CAC 40 of France rose by 1.26 percent. The FTSE 100 of the U.K. climbed by 0.46 percent and the SMI of Switzerland closed up by 0.96 percent.

In Frankfurt, Commerzbank climbed by 2.15 percent and Deutsche Bank gained 1.03 percent.

Automakers finished solidly to the upside Friday. Shares of Daimler rose by 2.13 percent and BMW gained 2.43 percent. Volkswagen climbed by 1.70 percent and Porsche finished up by 0.98 percent.

In Paris, Credit Agricole increased by 1.04 percent. The company announced that it is in talks with China's Citic Securities to sell its Hong-Kong based brokerage business CLSA.

Automaker Renault climbed by 1.89 percent and Peugeot finished higher by 1.26 percent.

In London, Rio Tinto climbed by 2.09 percent. The company announced that it has become a member of the new China Beijing Metals Exchange, an electronic trading platform that will provide participating members with an additional iron ore trading channel in the China market.

BHP Billiton finished higher by 1.60 percent, after the company announced that its Iron Ore President, Ian Ashby, would be leaving on 1 July 2012 after more than 25 years with the company.

The rest of the mining stocks also turned in strong performances on Friday. Kazakhmys climbed by 1.74 percent and Vedanta Resources gained 1.49 percent.

Bank stocks increased for the first time this week. Shares of HSBC Holdings rose by 1.41 percent. Barclays increased by 0.47 percent and Standard Chartered climbed by 1.40 percent.

Vodafone fell by 1.29 percent. The company is considering a number of actions following a budget proposal by India to retrospectively tax overseas transactions involving local assets.

Shares of easyJet climbed by 1.57 percent. Morgan Stanley reiterated its "Overweight" rating on the stock and increased its price target.

Eurozone inflation eased in March but at a slower than expected pace, the flash estimate published by Eurostat showed Friday. Annual inflation fell to 2.6 percent in March from 2.7 percent in February. March's inflation was the lowest since August 2011, but slightly higher than the 2.5 percent consensus forecast.

France's consumer spending increased at the fastest pace in more than a decade in February, following a decline in the previous two months, data released by the statistical office INSEE showed Friday. Consumer spending rose a working-day and seasonally adjusted 3 percent month-on-month, following 0.4 percent decline in each of the previous two months. Economist had forecast spending to rise just 0.2 percent.

Retail sales in Germany declined unexpectedly for a second consecutive month in February as concerns regarding rising fuel prices largely eclipsed positive sentiment from strong labor market conditions. The calendar and seasonally adjusted retail sales fell 1.1 percent month-on-month in real terms in February, following a 1.2 percent drop in January. Economists had expected 1.2 percent increase in sales during the month. Sales have fallen in four of the past six months.

With U.S. personal spending increasing at a much faster rate than personal income in the month of February, the Commerce Department released a report on Friday showing a notable drop in the personal savings rate for the month. The report showed that personal spending rose by 0.8 percent in February following an upwardly revised 0.4 percent increase in January. Economists had expected spending to increase by 0.6 percent compared to the 0.2 percent growth that had been reported for the previous month.

Meanwhile, personal income edged up by 0.2 percent in February, matching the downwardly revised increase seen in the previous month. Personal income had been expected to increase by 0.4 percent.

After jumping to a ten-month high in the month of February, the Institute for Supply Management - Chicago's index of regional business activity fell by month than expected in March, according to a report released by the group on Friday. The ISM Chicago said its business barometer fell to 62.2 in March from 64.0 in February, although a reading above 50 still indicates an increase in business activity. Economists had expected the index to show a more modest drop to a reading of 63.0.

While Reuters and the University of Michigan initially reported a drop in U.S. consumer sentiment in the month of March, a revised reported released on Friday showed that consumer sentiment actually improved during the month. The report showed that the consumer sentiment index for March was upwardly revised to a reading of 76.2 from the preliminary reading of 74.3. With the upward revision, the March reading is up from 75.3 in February and above economists' estimate of 75.0.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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