The European markets rebounded from the losses of the previous session on Friday. The ECB on Thursday decided to leave interest rates unchanged and hinted that it "may undertake outright open market operations." However, ECB chief Mario Draghi announced no concrete measures such as bond purchases of struggling peripheral nations to curb the region's debt crisis. The European markets sold off following the announcement.
The mood was much more upbeat on Friday, especially after the larger than expected increase in U.S. non-farm payroll employment for July. Shares of European banks were among the strongest performers on the day.
The International Monetary Fund has said that spillovers from a failure of policies to get ahead of the euro area debt crisis could affect the entire Europe as the stresses are no longer a confined to the peripheral countries in the single-currency bloc.
Policy reactions by the whole euro area and its partners can mitigate these effects, the Fund said in its 2012 Spillover Report, published Thursday. Despite the progress in the face of constraints, not enough has been done to stop the spread of stresses and attenuate fiscal-growth-banking feedback loops, the report pointed out.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 4.57 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 2.13 percent.
The DAX of Germany rose by 3.93 percent and the CAC 40 of France gained 4.38 percent. The FTSE 100 of the U.K. climbed by 0.85 percent and the SMI of Switzerland finished higher by 2.17 percent.
In Frankfurt, Allianz increased by 6.51 percent, after reporting higher earnings in the second quarter.
Siemens gained 6.35 percent, after announcing a share buyback.
Commerzbank climbed by 6.43 percent and Deutsche Bank added 8.85 percent.
Publishing firm Axel Springer rose by 0.80 percent, after Berenberg downgraded the stock to "Hold" from "Buy."
In Paris, Axa rose by 5.06 percent. The insurer reported first quarter operating profit that topped analysts' expectation.
Societe Generale climbed by 10.27 percent, BNP Paribas increased by 8.66 percent and Credit Agricole gained 8.04 percent.
In London, BHP Billiton finished higher by 3.31 percent. The miner said it would incur $3.29 billion in write-downs related to its U.S. shale and Australian nickel assets, citing low US gas prices and margin deterioration.
Royal Bank of Scotland reported a narrower loss for the second quarter, and jumped by 6.46 percent. Lloyds Banking Group increased by 4.15 percent and HSBC rose by 4.33 percent. Barclays gained 5.58 percent and Standard Chartered finished higher by 4.54 percent.
International Consolidated Airlines declined by 5.21 percent, after reporting a loss for the second quarter and cutting its full year profit forecast.
Inmarsat surged by 10.88 percent after reporting first-half results.
Givaudan dropped by 3.56 percent in Zurich, after the company reported results for the first half of the year.
Eurozone retail sales volume rose 0.1 percent month-on-month in June, Eurostat reported Friday. The June increase was in contrast to a 0.1 percent fall forecast by economists. In May, retail trade increased 0.8 percent.
Germany's private sector activity declined less than initially estimated in July, but the rate of fall quickened from the previous month, data released by Markit Economics showed Friday.
The composite output index, which measures performance of both the manufacturing sector and the service sector, came in at 47.5 in July, slightly higher than 47.3 recorded in flash estimates. The latest figure was lower than June's 48.1, indicating a faster deterioration in business conditions.
The British service sector expanded at the slowest pace in nineteen months in July, as the weakening economic climate weighed on activity, data from a survey by Markit Economics and the Chartered Institute of Purchasing and Supply (CIPS) showed Friday. The seasonally adjusted purchasing managers' index (PMI) for the service sector dropped to 51 in July from 51.3 in June. Economists were looking for a reading of 51.6.
China's non-manufacturing sector growth eased in July as inflow of new orders weakened, the latest survey by the China Federation of Logistics and Purchasing (CFLP) showed Friday. The seasonally adjusted purchasing managers' index for the services sector fell to 55.6 in July from 56.7 in June.
Employment in the U.S. rose by more than anticipated in the month of July, according to a report released by the Labor Department on Friday, although the report also showed an unexpected uptick by the unemployment rate.
The Labor Department said non-farm payroll employment increased by 163,000 jobs in July following a downwardly revised increase of 64,000 jobs in June. Economists had expected employment to increase by about 100,000 jobs compared to the addition of 80,000 jobs originally reported for the previous month.
Despite the job growth for the month, the unemployment rate edged up to 8.3 percent in July from 8.2 percent in June. The increase surprised economists, who had expected the unemployment rate to come in unchanged.
While respondents' comments were mixed, the results of the Institute for Supply Management's survey of activity in the service sector in the month of July showed continued growth at a slighter faster rate.
The ISM said its non-manufacturing index crept up to 52.6 in July from 52.1 in June, with a reading above 50 indicating growth in the service sector. The increase surprised economists, who had expected the index to edge down to a reading of 52.0.
by RTT Staff Writer
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