The majority of the European markets finished in positive territory on Thursday, after receiving a boost from some economic reports from China and some strong earnings results. Earnings reports from major companies like Nestle and from Novo Nordisk provided a boost to the markets. The positive early performance from the U.S. stock markets also provided some support to the markets in the afternoon.
Inflation in China eased for a fourth straight month to reach a 30-month low in July, paving way for the policymakers to go ahead with stimulus measures to counter a slowdown in economic growth. The rate of inflation fell to 1.8 percent in July from 2.2 percent in June, the National Bureau of Statistics said Thursday. Economists expected a fall to 1.7 percent.
The intensification of fiscal consolidation in some euro area nations and higher uncertainty over debt crisis are set to weigh on overall growth prospects, results of the Survey of Professional Forecasters released with the European Central Bank monthly bulletin showed Thursday.
The Eurozone economy is forecast to shrink 0.3 percent this year, compared to the prior estimate of 0.2 percent fall. The 2013 growth outlook was lowered to 0.6 percent from 1 percent.
The European Central Bank considered the high borrowing costs faced by some euro area sovereigns was mainly driven by fears of a collapse of the euro and must be tackled through fiscal consolidation and structural reforms, according the bank's monthly bulletin, released Thursday.
"Exceptionally high risk premia are observed in government bond prices in several countries and financial fragmentation hinders the effective working of monetary policy," the central bank said. "Risk premia that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner," it said.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.08 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.28 percent.
The CAC 40 of France climbed by 0.54 percent, but the DAX of Germany fell by 0.02 percent. The FTSE 100 of the U.K. rose by 0.10 percent and the SMI of Switzerland finished up by 0.73 percent.
In Frankfurt, Commerzbank declined by 4.29 percent after its second quarter earnings report fell short of expectations. The company also issued a warning on its net profit for the second half of the year.
Deutsche Telekom fell by 1.92 percent. The telecommunications firm reported a 76.4 percent jump in second-quarter profit on lower expenses and improved profitability in its U.S. unit, but revenues were hurt mainly by line losses in Germany.
Symrise climbed by 2.78 percent, after the company's second quarter profit increased.
Commerzbank downgraded its rating on Axel Springer to "Hold" from "Add." The stock fell by 0.85 percent.
In London, AMEC declined by 4.83 percent, despite a significant increase in its first half profit.
Aviva decreased by 0.47 percent. The insurer reported a loss for the first half, reflecting mainly a write-down of goodwill in its U.S. business and higher restructuring costs.
Randgold Resources gained 1.78 percent, after it reported a higher first-half profit.
Standard Chartered advanced by 3.61 percent, on reports that its chief executive is planning to fight back on Iran allegations.
Nestle rose by 2.35 percent in Zurich. The food giant said its profit in the first half of the year grew nearly 9 percent from last year, with growth across all its regions, helped partly by pricing. The company also confirmed its full year guidance.
The U.K.'s visible trade gap widened to a record in the second quarter as weak demand for goods hampered exports that could act as a drag on the economy that is mired in recession. As exports declined more than imports, the visible trade deficit grew by GBP 3.2 billion to GBP 28.3 billion in the second quarter, the biggest since comparable records began in 1997, the Office for National Statistics said Thursday.
China's industrial output growth moderated unexpectedly in July, the latest data from the National Bureau of Statistics showed Thursday. Industrial production rose 9.2 percent year-on-year in July, slower than 9.5 percent increase in the previous month. The rate of growth was expected to accelerate to 9.7 percent.
Retail sales in China grew at a slower pace in July, the latest figures from the National Bureau of Statistics showed Thursday. Retail sales rose 13.1 percent year-on-year in July compared to forecasts for an increase of 13.5 percent. This followed a 13.7 percent increase in June.
First-time claims for U.S. unemployment benefits unexpectedly showed a modest decrease in the week ended August 4th, according to a report released by the Labor Department on Thursday.
The report showed that initial jobless claims fell to 361,000 from the previous week's revised figure of 367,000. Economists had expected jobless claims to edge up to 367,000 from the 365,000 originally reported for the previous week.
A notable increase in exports combined with a drop in imports combined to shrink the U.S. trade deficit by much more than expected in the month of June, according to figures released Thursday by the Commerce Department.
Commerce Department figures for June showed a total level of U.S. exports of $185 billion and a total level of U.S. imports of $227.9 billion, leading to a deficit of $42.9 billion. The deficit marks a 10.7 percent drop from the revised May level of $48 billion, which was downwardly revised from the $48.7 billion initially reported. While most economists had expected the deficit to narrow, most had predicted a far smaller drop to $47.5 billion.
U.S. wholesale inventories fell unexpectedly in June, according to figures released by the Commerce Department on Thursday, with wholesale sales dropping even further. The report said U.S. wholesale inventories were estimated at a seasonally adjusted level of $481.9 billion in June, a 0.2 percent decline from revised May levels.
May wholesale inventories, which had initially shown a 0.3 percent increase, were downwardly revised to show essentially no change for the month. Most economists had expected wholesale inventories for June to continue to increase, matching the 0.3 percent increase initially reported for May.
by RTT Staff Writer
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