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European Markets Closed Solidly Higher After Surge In German Sentiment

The European market finished solidly to the upside on Tuesday, boosted in part by a surge in German economic sentiment. The mood of the market was positive ahead of the meeting of the U.S. Federal Reserve, which will occur later today. The strong performance of the U.S. markets also provided support to trading in the afternoon.

Eurozone finance ministers gave their final approval to a second bailout package for Greece late Monday, after the country completed a debt swap deal with its private creditors last week.

The euro area finance ministers also urged Spain to take deeper fiscal cuts to bring the deficit below 3 percent of GDP by 2013. "We discussed the fiscal situation in Spain. We noted the sizable overrun in the budget execution of 2011, which requires a larger consolidation effort in 2012," the ministers said.

The Euro Stoxx 50 index of eurozone bluechip stocks climbed by 1.69 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, increased by 1.69 percent.

The DAX of Germany gained 1.37 percent, while the CAC 40 of France rose by 1.72 percent. The FTSE 100 of the U.K. climbed by 1.07 percent and the SMI of Switzerland increased by 1.13 percent.

In Frankfurt, BMW said it is targeting a worldwide sales volume of over two million vehicles in 2016. This is significantly earlier than earlier projections of 2020. BMW finished down by 0.65 percent.

Munich Re climbed by 2.58 percent, after it reported a higher profit for the fourth quarter.

Nemetschek increased by 2.10 percent after Goldman Sachs upgraded the stock to "Buy" from "Neutral."

In Paris, Societe Generale was downgraded by HSBC to "Neutral" from "Overweight." The stock closed higher by 2.36 percent.

In London, AstraZeneca closed up by 0.40 percent. The company filed a lawsuit in a U.S. District Court asking to overturn the U.S. regulator's denial of a bid to delay the entry of generic versions of its antipsychotic Seroquel.

Standard Life finished up by 0.68 percent, after reporting a lower pre-tax profit for the year.

Prudential surged by 5.83 percent. The insurer said it has made a positive start to 2012 and is well positioned to deliver continued relative outperformance in the medium-term, despite an uncertain macroeconomic environment.

Antofagasta fell by 1.82 percent. The company's total dividend for 2011 fell to 44 cents, from 116 cents paid in 2010, reflecting a 76 percent drop in proposed special dividend. The Chilean miner also said copper prices in the short-term are likely to remain volatile.

G4S lost 3.01 percent, after the security firm reported a lower pre-tax profit for the year.

Germany's economic sentiment strengthened sharply in March to a level last seen in June 2010, according to results released Tuesday by the Zew Institute. Economic sentiment improved to 22.3 in March from 5.4 in February. Economists had expected the index to come in at 10.

The U.K.'s trade deficit widened to 7.5 billion pounds in January from 7.2 billion pounds a month ago, the Office for National Statistics said. The shortfall was smaller than an expected 7.9 billion pounds deficit.

A leading indicator of the British economy increased for the first time in six months, data from a survey by the Conference Board showed Tuesday. The leading economic index increased 0.9 percent to 103.1 in January, after declining 0.5 percent in December.

A strong performance in the automotive sector fueled a surge in U.S. retail sales in February, according to figures released Tuesday by the Commerce Department. Retail sales came in at a seasonally adjusted level of $407.8 billion, a 1.1 percent increase over January levels. The increase was lower than the 1.2 percent predicted by most economists, but was higher than revised figures of a 0.6 percent increase in January.

Businesses increased their inventories by more than expected in the month of January, according to figures released Tuesday by the Commerce Department. U.S. business inventories at a seasonally adjusted level of $1.569 trillion, up 0.7 percent from December. The increase came in higher than the 0.5 percent increase predicted by most economists.

The Federal Open Market Committee is scheduled to begin a 1-day meeting to discuss the near term direction of monetary policy. The monetary policy-setting arm of the Federal Reserve is set to release a post-meeting policy statement at 2:15 pm ET.

by RTT Staff Writer

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