European stocks may rise on Friday, mirroring firmer commodities and gains on Wall Street overnight and in Asia this morning, as expectations that major central banks will announce further stimulus after this weekend's Greek elections eased pessimism about the outlook for Europe.
Bank of England Governor Mervyn King said in a speech at the Mansion House yesterday that the case for more stimulus is increasing amid deterioration in the economic outlook.
"With signs of a deterioration in the outlook, especially in world markets, the case for a further monetary easing is growing," he said. King said the central bank is willing to provide whatever liquidity banks require given the prospect of turbulence ahead.
A disappointing report on initial jobless claims and the decline in U.S. consumer prices by the most since December 2008 in May also increased the chances of further stimulus from the Fed ahead of its June monetary policy decision on Wednesday.
On the flip side, Moody's Investors Service has downgraded the long-term debt and deposit ratings of five Dutch banking groups, four of them by two notches and one by a single notch, reflecting its view that Dutch banks would face difficult operating conditions throughout this year amid the European debt crisis, recession and lower house prices.
The rating agency also warned that negative rating momentum could develop if conditions deteriorate beyond current expectations. However, Moody's has considered an increased risk of Greece's exit from the euro area, which is not the central scenario currently.
In the forex market, the Japanese yen strengthened against most of its major counterparts after the Bank of Japan left its benchmark interest rate unchanged and left the size of its asset purchase and credit facility unchanged at JPY 40 trillion and JPY 30 trillion, respectively.
The central bank upgraded its assessment of the domestic economy, saying it "has started picking up moderately as domestic demand remains firm, mainly supported by reconstruction demand."
In domestic corporate news, GlaxoSmithKline Plc said it has received approval for Menhibrix, a combination vaccine to prevent invasive disease caused by Neisseria meningitidis serogroups C and Y and Haemophilus influenzaetype b.
Italian insurer Assicurazioni Generali SpA announced that its newly appointed chief executive Mario Greco will join the board from August 1.
MTU Aero Engines Holding AG said it has successfully placed a EUR 250 million bond on the capital market.
América Móvil S.A.B. de C.V. has reached an agreement with Marathon Zwei Beteiligungs GmbH, a wholly-owned unit of RPR Privatstiftung, the private trust set up by Ronny Pecik to acquire some 21 percent of the outstanding shares of Telekom Austria AG.
European stocks finished mostly to the downside on Thursday, as a Spanish downgrade by ratings agency Moody's and concerns over Greece's future in the euro zone kept investors at bay.
The Euro Stoxx 50 index of eurozone bluechip edged up 0.2 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, slid 0.3 percent. Around Europe, the German DAX, the FTSE 100 of the U.K. and Switzerland's SMI dropped between 0.2 percent and 0.6 percent, while France's CAC 40 ended up a modest 0.1 percent.
On Wall Street, stocks ended with strong gains overnight amid speculation of more economic stimulus following reports that major central banks are preparing coordinated action to provide liquidity if the Greek election leads to chaos in financial markets.
On the economic front, weekly jobless claims unexpectedly rose by 6,000 to a seasonally adjusted 386,000 last week, while consumer prices fell by 0.3 percent in May, the sharpest drop in nearly three years. The Dow rose 1.2 percent, the tech-heavy Nasdaq gained 0.6 percent and the S&P 500 added 1.1 percent.
by RTT Staff Writer
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