The European markets closed mixed on Wednesday, after a round of economic reports from the U.S. failed to provide a clear picture of the direction of the economy. U.S. homebuilder confidence and industrial production results were viewed positively, but the CPI result and the New York Fed survey result were disappointments. Investor sentiment was also impacted by diminishing hopes for further economic stimulus.
Policymakers of the Bank of England were unanimous in maintaining quantitative easing at GBP 375 billion early this month, the minutes of the August meeting revealed Wednesday. The meeting was held on August 1 and 2.
The decision to retain the interest rate at a record low 0.50 percent was also unanimous. Policymakers led by governor Mervyn King said they will review the need for more measures in light of the impact of the recently announced credit boosting steps.
The nine-member Monetary Policy Committee discussed whether it was appropriate to expand or continue with the program of asset purchases it had agreed at its previous meeting. The minutes suggest that the central bank is likely to provide more stimulus later this year.
Greece is set to seek an extension of the austerity programme agreement with its lenders, the Financial Times reported Tuesday citing a document. Prime Minister Antonis Samaras is expected to request a two-year extension, when he meets German Chancellor Angela Merkel and French President François Hollande next week.
According to the proposed plan, Greece hopes to spread its austerity measures over four years. Also, it will request to reduce the deficit cutting target to 1.5 percent point of GDP instead of 2.5 percent under the current plan.
Ireland's first issue of sovereign annuity bonds underlines the improving financing flexibility of the nation, Fitch Ratings said Wednesday. The nation is preparing to issue the bonds to attract life insurers offering European sovereign annuities. But it is still uncertain what degree of market access can be maintained after Ireland's EU/IMF programme expires, Fitch said.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.02 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.11 percent.
The DAX of Germany dropped by 0.40 percent and the FTSE 100 of the U.K. fell by 0.54 percent. The CAC 40 of France decreased by 0.03 percent, but the SMI of Switzerland gained 0.09 percent.
In Frankfurt, Air Berlin rose by 0.57 percent. The company reported a wider loss for the second quarter.
Deutsche Telekom lost 0.81 percent, after UBS removed the stock from its 'Most Preferred List.'
Carl Zeiss Meditec was downgraded to "Add" from "Buy." The stock finished down by 2.25 percent.
In London, Eurasian Natural Resources sank by 8.68 percent. The company's first-half profit plunged on weak prices.
Rio Tinto fell by 4.75 percent and Anglo American lost 3.77 percent. BHP Billiton decreased by 2.27 percent and Antofagasta declined by 2.07 percent.
CRH dropped by 2.72 percent. UBS added the stock to 'Least Preferred List' in European building materials.
Imperial Tobacco lost 1.74 percent following a new branding rule in Australia.
Standard Chartered climbed by 4.12 percent, after the lender agreed to settle the money-laundering probe with the New York regulator, by paying $340 million.
Vodafone decreased by 0.97 percent, after the stock was downgraded by Bank of America to "Neutral" from "Buy."
Resolution gained 3.59 percent, after the company reported results for the first half of the year.
Balfour Beatty closed up by 0.61 percent, after announcing first-half results.
Holcim finished lower by 1.17 in Zurich, after reporting a higher quarterly profit.
Indicating the remarkable resilience of the U.K. labor market amid a severe recession, the number of Britons seeking jobless benefits unexpectedly declined in July, apparently due to a temporary boost from the Olympics.
The claimant count declined by 5,900 persons monthly to a three-month low of 1.59 million in July. Economists had expected the figure to climb by 6,000. The measure was higher by 35,600 persons from a year ago. In June, the claimant count figure had risen by 1,000.
The claimant count rate was 4.9 percent during the month, unchanged from June. That was in line with economists' expectations.
With a continued drop in energy prices offset by higher prices for food, shelter and medical care, the Labor Department released a report on Wednesday showing that U.S. consumer prices unexpectedly came in unchanged in the month of July.
The Labor Department said its consumer price index for July showed that prices were unchanged for the second consecutive month. Economists had been expecting prices to edge up by about 0.2 percent.
Conditions for New York manufacturers have unexpectedly deteriorated in the month of August, according to a report released by the Federal Reserve Bank of New York on Wednesday, with the index of regional manufacturing activity turning negative for the first time in ten months.
The New York Fed said its general business conditions index dropped to a negative 5.9 in August from a positive 7.4 in July, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to show a much more modest decrease to 7.0.
Industrial production in the U.S. rose by slightly more than anticipated in the month of July, according to a report released by the Federal Reserve on Wednesday, with the report showing increased output in each of the manufacturing, mining, and utilities sectors. The report showed that industrial production increased by 0.6 percent in July compared to economist estimates for an increase of about 0.5 percent.
Homebuilder confidence in the U.S. has unexpectedly seen a continued improvement in the month of August, the National Association of Home Builders revealed in a report on Wednesday, with the homebuilder confidence index reaching a new five-year high.
The report showed that the NAHB/Wells Fargo Housing Market Index climbed to 37 in August from 35 in July. The increase came as a surprise to economists, who had expected the index to come in unchanged compared to the previous month.
by RTT Staff Writer
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