The majority of the European markets closed in positive territory on Wednesday, as investors watch for the results of the 2-day FOMC meeting in the United States. Investors appear confident that some form of economic stimulus is forthcoming, as evidenced by yesterday's strong rally and today's further gains. The Fed may decide to expand its bond-buying program, Operation Twist, which is scheduled to expire this month. Investors are hoping that another round of quantitative easing, or QE3, may be announced.
Bank of England policymakers retained the size of quantitative easing at GBP 325 billion earlier this month as demand for more stimulus by Governor Mervyn King and three others was overturned by a majority of five.
Although members acknowledged that further stimulus is likely to become warranted, a majority found merit in waiting for events occurring over the coming weeks before finalizing additional stimulus, the minutes of the meeting held on June 6 and 7 showed Wednesday.
The stage is set to form a three-party coalition government in Greece led by the conservative New Democracy party, with the smaller socialist PASOK, Democratic Left parties agreeing on Wednesday to join it, reports said.
The meeting of the Group of Twenty nations in Los Cabos, Mexico concluded Tuesday with the leaders reinforcing their commitment to work collectively to foster growth, create high quality jobs and address the ongoing financial market tensions.
At the G20 summit, Italy put forth a proposal urging Eurozone economies to allow the common rescue funds to buy the debt of troubled economies on the secondary markets. This would help the countries avoid a bailout and lower their borrowing costs.
The proposal, presented by Italy's Prime Minister Mario Monti, is backed by France. It is likely to be discussed at a meeting between the leaders of core euro area economies in Rome on June 22, reports said.
Meanwhile, French President Francois Hollande called for the issuance of euro bills as a short-term measure, the newspaper Handelsblatt reported Tuesday, citing a strategy paper.
German Chancellor Angela Merkel denied that there were any discussions at G20 summit on using either the European Financial Stability Facility or the European Stability Mechanism to buy Eurozone sovereign debt.
The issue of euro bills is not an appropriate strategy to overcome the crisis of confidence, European Central Bank Governing Council member Jens Weidmann said in an interview with German manager magazine.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.41 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.24 percent.
The DAX of Germany gained 0.45 percent and the FTSE 100 of the U.K. climbed by 0.64 percent. The CAC 40 of France rose by 0.28 percent, but the SMI of Switzerland declined by 0.27 percent.
In Frankfurt, E.ON and RWE gained 2.33 percent and 3.25 percent, respectively. Nomura upgraded its rating on both stocks.
Deutsche Telekom climbed by 1.74 percent. Bernstein upgraded its rating on the stock to "Outperform" from "Market Perform."
In Paris, Danone dropped by 1.67 percent. UBS lowered its rating on the stock to "Neutral" from "Buy" and Merrill Lynch cut the stock to "Underperform" from "Buy". Several brokerages also reduced their price targets on the stock.
Danone slashed its operating margin target for 2012 on Tuesday, citing steeper-than-anticipated demand deterioration in Southern Europe, particularly in Spain, and escalating costs.
In London, Rio Tinto increased by 1.21 percent. The miner said it would commit $4.2 billion to develop its tier one iron ore business to meet increased iron ore demand from Asian markets.
Sage Group climbed by 5.92 percent, reportedly on a positive broker recommendation.
Kesa Electricals declined by 3.17 percent, after posting a loss for the year.
Aer Lingus Group surged by 16.60 percent. Ryanair has said that it plans to make an all-cash offer worth $879 million for Aer Lingus. Ryanair Holdings gained 0.48 percent.
Holcim gained 1.28 percent in Zurich. Berenberg upgraded the stock to "Buy" from "Sell."
Swiss Life increased by 6.09 percent. The stock was upgraded to "Buy" from "Neutral" at UBS.
Germany's producer price inflation slowed more than expected to 2.1 percent in May, Destatis said Wednesday. Economists were expecting the rate to ease to 2.2 percent from 2.4 percent in April.
Germany's leading index dropped slightly in April largely reflecting the weakness in consumer sentiment, the Conference Board said Wednesday. The leading index was down 0.1 percent, reversing March's 0.2 percent increase. While four of the seven components of the indicator improved in April, stock prices, consumer confidence and new residential construction orders deteriorated.
The number of persons claiming job seekers' allowance in the U.K. increased unexpectedly in May as the economy's return to recession made firms hesitant to hire more staff. The claimant count increased by 8,100 from the previous month to 1.60 million in May. The figure was forecast to fall by 4,000 on a month-on-month basis. The claimant count rate remained steady at 4.9 percent as expected.
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org