The European markets finished to the upside on Friday, on speculation that central banks are prepared to inject cash in the event of an escalation in turmoil in the region after the elections in Greece on Sunday. The highly anticipated second round of elections in Greece could determine whether Greece remains a member of the Eurozone, or makes an exit. Financial stocks were strong on Friday, particularly shares of the large banks.
Greece can decide about its membership in the euro area, but the country would have to bear the consequences, European Central Bank Governing Council member Jens Weidmann reportedly said in a joint interview.
In the interview jointly given to newspapers Kathimerini, Corriere della Sera, El Pais and Publico, the Bundesbank president said if it decides to exit, then Greece will be worse affected than any other member nations.
European Central Bank President Mario Draghi said on Friday that inflation expectations remain well anchored and there is no inflation risk in any euro area country. "Should risks to price stability emerge, the Eurosystem has sufficient tools at its disposal to absorb excess liquidity," Draghi said in a speech at the 14th ECB Watchers Conference in Frankfurt. "And should risks to price stability emerge, the Eurosystem has sufficient tools at its disposal to absorb excess liquidity."
Bank of England Governor Mervyn King said 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 in a speech at the Mansion House on Thursday.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.41 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.80 percent.
The DAX of Germany climbed by 1.48 percent and the CAC 40 of France gained 1.82 percent. The FTSE 100 of the U.K. rose by 0.47 percent and the SMI of Switzerland finished higher by 0.06 percent.
In Frankfurt, Daimler increased by 1.29 percent and Volkswagen closed up by 1.77 percent.
Commerzbank rose by 5.36 percent and Deutsche Bank gained 2.03 percent.
HeidelbergCement finished up by 2.34 percent. Deutsche Bank cut its price target on the stock.
In Paris, Carrefour rose by 5.92 percent. The supermarket chain has decided to sell its ownership in the Carrefour Marinopoulos joint venture in Greece to Marinopoulos Group.
Peugeot climbed by 2.36 percent and Renault finished up by 1.80 percent.
Societe Generale increased by 5.02 percent, Credit Agricole rose by 6.28 percent and BNP Paribas gained 4.26 percent.
In London, Anglo American rose by 0.96 percent and Antofagasta advanced by 1.90 percent. Eurasian Natural Resources climbed by 4.76 percent and Vedanta Resources gained 6.31 percent.
Randgold Resources climbed by 1.44 percent, reportedly on a broker upgrade.
Aggreko declined by 4.58 percent. The temporary power provider said in a trading update that it expects to deliver a strong performance for the first half of the year. However, margins in International Power Projects are expected to be lower in the second half compared to last year, owing mainly to higher mobilization costs.
Royal Bank of Scotland surged by 7.93 percent and Lloyds Banking Group added 5.21 percent. Barclays rose by 4.18 percent and Standard Chartered closed up by 1.27 percent.
Employment in the euro area decreased for the third consecutive quarter in the first three months of 2012, as companies reduced their staff strength to cut costs in the face of weak demand and uncertain economic outlook. Data from Eurostat on Friday showed that the number of persons in employment in the single currency bloc decreased a seasonally adjusted 0.2 percent sequentially in the first quarter. This follows a fall of 0.3 percent in the fourth quarter, which was revised up from 0.2 percent fall.
The trade surplus in the Eurozone surged in April from a month ago. But it does not reflect an improvement in foreign trade, as this was driven by a bigger fall in imports. The seasonally adjusted trade surplus increased in April to EUR 6.2 billion from EUR 3.7 billion in the previous month. The surplus also exceeded the expected level of EUR 4.2 billion.
New York manufacturing activity has seen only a slight expansion in the month of June, according to a report released by the Federal Reserve Bank of New York on Friday, with the index of activity in the sector falling by much more than economists had anticipated.
The New York Fed said its general business conditions index fell to 2.3 in June from 17.1 in May, although a positive reading still indicates growth in regional manufacturing activity. Economists had expected the index to show a much more modest decrease to a reading of 13.8.
With a drop in manufacturing output offsetting increases in mining and utilities production, the Federal Reserve released a report on Friday showing an unexpected decrease in U.S. industrial production in the month of May.
The report showed that production edged down by 0.1 percent in May after a downwardly revised 1.0 percent increase in April. Economists had expected production to come in unchanged following the 1.1 percent increase originally reported for the previous month.
Consumer sentiment in the U.S. deteriorated by much more than anticipated in the month of June, according to a report released by Thomson Reuters and the University of Michigan on Friday, with the drop likely reflecting the disappointing jobs data. The report showed that the consumer sentiment index fell to 74.1 in June from the final May reading of 79.3. Economists had expected the index to show a more modest decrease to a reading of 77.5.
by RTT Staff Writer
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