Plus   Neg

European Markets Finished Mixed Ahead Of FOMC Minutes

The European markets ended Wednesday's trading session with mixed results, following yesterday's strong rally. The markets were impacted by the larger than expected decline in U.S. housing starts in the afternoon. The minutes from the Bank of England meeting from earlier in the month were released today and investors are waiting for the release of the U.S. FOMC minutes, which are due out later today. Investors remained cautious ahead of the Italian elections, which will take place this weekend.

A call for additional stimulus by Bank of England Governor Mervyn King and two other policymakers were overturned by a majority of 6 members at a meeting that discussed the expansion of quantitative easing and cutting interest rates to boost the economy.

At the meeting held on February 6 and 7, King and Paul Fisher joined David Miles, in seeking an increase in asset purchases by GBP 25 billion to a total GBP 400 billion, the minutes showed Wednesday.

Rating agency Standard and Poor's on Wednesday warned that the risk of Cyprus defaulting on its sovereign debt is "material and rising," if the international creditors fail to reach an agreement on a bailout package for the euro member.

S&P said there is at least a one-in-three chance of lowering Cyprus' sovereign ratings again in 2013. Failure to secure a rescue deal would leave Cypriot authorities with few choices apart from to restructure its financial obligations, S&P's head of EMEA sovereign ratings Moritz Kraemer was quoted as saying.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.82 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.43 percent.

The DAX of Germany fell by 0.30 percent and the CAC 40 of France dropped by 0.69 percent. The FTSE 100 of the U.K. climbed by 0.15 percent and the SMI of Switzerland gained 0.61 percent.

In Frankfurt, Daimler fell by 0.10 percent. Morgan Stanley upgraded the stock to ''Equalweight'' from ''Overweight.''

Electronics manufacturer Kontron surged by 9.88 percent, after receiving a positive broker recommendation.

SMA Solar climbed by 4.39 percent. The stock was upgraded to ''Buy'' from ''Hold'' at Deutsche Bank.

Publishing firm Axel Springer gained 0.83 percent, after HSBC upgraded the stock.

MTU, which also received a positive broker recommendation, added 1.15 percent.

Deutsche Lufthansa, which reported lower annual profit and scrapped its dividend, sank by 6.04 percent.

In Paris, hotel group Accor declined by 3.60 percent, after reporting a full year loss.

Lafarge increased by 5.45 percent, after reporting financial results.

Credit Agricole advanced by 3.89 percent. The lender reported higher normalised net income for the fourth quarter, on the resilience of French retail banking and a good performance in Savings management.

Societe Generale, which received a broker upgrade, finished lower by 1.56 percent.

In London, Rexam climbed by 5.20 percent, followed by Melrose, which added 3.58 percent. The consumer packaging firm reported a lower annual profit.

Barclays fell by 0.48 percent, after Goldman Sachs downgraded it to "Neutral" from "Buy."

BHP Billiton decreased by 2.50 percent. The miner's Chief Executive Officer Marius Kloppers will retire from the position, effective May 10.

RSA Insurance Group reported lower annual profit and proposed a final dividend lower than that of the previous year. The stock sank by 14.89 percent.

Germany's producer price inflation rose to 1.7 percent on a yearly basis in January from 1.5 percent in December, Destatis reported Wednesday. The annual rate was forecast to ease to 1.2 percent in January.

Germany's EU harmonized inflation weakened in January as estimated earlier, final data released the Federal Statistical Office showed Wednesday. Inflation as per the harmonized index of consumer prices (HICP) slowed to 1.9 percent in January from 2 percent in December.

France's EU harmonized inflation weakened to the lowest level in around three years in January, data released by statistical office Insee showed Wednesday. Inflation as per the harmonized index of consumer prices (HICP) dropped to 1.4 percent in January from 1.5 percent in December. Economists expected inflation to rise to 1.6 percent.

French business sentiment improved more than expected to 90 in February from 87 in January, survey data from the statistical office Insee showed Wednesday. The reading was forecast to rise to 87 from January's originally estimated figure of 86.

The French leading index declined in December, suggesting that economic activity may recover slowly in the near term, data from the Conference Board showed Wednesday. The leading index dropped 0.2 percent in December, reversing a 0.4 percent rise in November.

The number of Britons claiming job seekers' allowance fell much more than forecast in January, while the number of employed persons hit a new record at the end of 2012, suggesting that the job market has been impressively resilient despite the economy's weakness.

Jobless claims fell by 12,500 month-over-month to 1.54 million in January, the latest data released by the Office for National Statistics showed Wednesday. Economists expected a more modest decline of 5,500. In December, the number of claimants fell by 15,800. The claimant count rate was steady at 4.7 percent in January.

With an increase in food prices offsetting a drop in energy prices, the Labor Department released a report on Wednesday showing a modest increase in U.S. producer prices in the month of January. The Labor Department said its producer price index rose by 0.2 percent in January after falling by 0.3 percent in December. Economists had expected prices to increase by about 0.3 percent.

New residential construction in the U.S. fell by more than anticipated in the month of January, according to a report released by the Commerce Department on Wednesday, with the decrease largely due to a sharp drop in multi-family housing starts.

The report said housing starts fell 8.5 percent to a seasonally adjusted annual rate of 890,000 in January from the revised December estimate of 973,000. Economists had expected housing starts to drop to 914,000 from the 954,000 originally reported for the previous month.

The report also showed that building permits, an indicator of future housing demand, rose 1.8 percent to an annual rate of 925,000 in January from the revised December rate of 909,000.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

Market Analysis

Follow RTT