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European Markets Climbed On U.S. Economic Data

The European markets finished in the green on Thursday, after the release of some better than expected economic data in the United States. The surge in U.S. housing starts and the larger than expected decrease in weekly jobless claims provided a boost to the markets in the afternoon. Investors will be watching for the Chinese fourth-quarter GDP data, which is scheduled to be released tomorrow.

The ECB said in its monthly bulletin that the Euro-area economy will begin a gradual recovery later in 2013 because of the accommodative monetary policy, together with significantly improved financial market confidence and reduced fragmentation.

The International Monetary Fund on Wednesday decided to release the next slice of bailout money to Greece after the euro member successfully carried out a bond buyback and passed further budget measures to ease the country's debt load.

After announcing the Executive Board's decision to disburse EUR 3.24 billion to Greece, IMF Managing Director Christine Lagarde said "the program is moving in the right direction" though it encountered a delay in implementation due to political crisis initially.

Lagarde said Wednesday that Greece has made progress with structural reforms, which is reflected in recent actions to reduce non-wage labor costs and reform the product market. "However, much more remains to be done to achieve the critical mass of reforms needed to boost productivity and lower prices."

Separately, the IMF granted EUR 838.8 million loan disbursement to Portugal, under a EUR 78 billion bailout package approved in 2011. IMF Deputy Managing Director and Acting Chair Nemat Shafik said that Portugal has made "considerable progress in fiscal and external adjustment."

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.51 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.19 percent.

The DAX of Germany climbed by 0.58 percent and the CAC 40 of France rose by 0.96 percent. The FTSE 100 of the U.K. advanced by 0.41 percent and the SMI of Switzerland gained 1.64 percent.

In Frankfurt, ThyssenKrupp AG climbed by 2.35 percent. The Wall Street Journal said steel giant Arcelormittal SA is one of the leading contenders among those who have floated offers to acquire the steel operations of the German industrial conglomerate in the United States.

Deutsche Telecom rose by 0.55 percent, on reports it is mulling further job cuts.

In Paris, Carrefour Group surged by 5.54 percent. The retailer reported a slight increase in the fourth-quarter sales, helped by good growth in emerging markets of Latin America and Asia.

Credit Agricole increased by 2.42 percent. BNP Paribas gained 2.91 percent and Societe Generale added 0.66 percent.

Remy Cointreau rose by 8.05 percent, after reporting a 6.5 percent increase in sales during the third quarter.

JCDecaux surged by 6.55 percent, after Societe Generale upgraded the stock to "Hold" from "Sell."

In London, Rio Tinto declined by 0.75 percent. The miner said it expects to recognize a non-cash impairment charge of approximately $14 billion, post tax, in its 2012 full year results. The company's CEO, Tom Albanese, also announced that he would step down.

Royal Bank of Scotland climbed by 1.09 percent and Barclays added 0.95 percent. HSBC advanced by 0.95 percent and Lloyds Banking Group gained 0.45 percent.

Euro area construction fell further in November, data released by Eurostat, the statistical office of the European Union, showed on Thursday.

Construction output declined a seasonally adjusted 4.7 percent year-on-year in November, after falling a revised 3.3 percent in October. Building construction fell 5.3 percent, while civil engineering output declined by 3.3 percent.

A leading indicator of the Spanish economy increased for the third successive month in November, indicating that the pace of contraction in the Spanish economy may ease in the near term, data from a survey by the Conference Board showed Thursday.

The leading economic index increased 0.5 percent month-on-month to 103.7 in November, marking the third monthly growth in a row. The largest contributions to the index came from the order books survey and Spanish contribution to Euro M2.

First-time claims for U.S. unemployment benefits fell by much more than anticipated in the week ended January 12th, according to a report released by the Labor Department on Thursday, with claims falling to their lowest level in five years.

The report showed that initial jobless claims fell to 335,000, a decrease of 37,000 from the previous week's revised figure of 372,000. Economists had been expecting jobless claims to show a much more modest decrease to 368,000 from the 371,000 originally reported for the previous week.

New residential construction in the U.S. increased by far more than expected in the month of December, the Commerce Department revealed in a report on Thursday, with housing starts jumping to a four-and-a-half-year high.

The Commerce Department said housing starts surged up 12.1 percent to a seasonally adjusted annual rate of 954,000 in December from the revised November estimate of 851,000. The increase lifted housing starts to their highest annual rate since June of 2008. Economists had expected housing starts to climb to an annual rate of 887,000 from the 861,000 originally reported for the previous month.

Building permits, an indicator of future housing demand, edged up by 0.3 percent to an annual rate of 903,000 in December from the revised November rate of 900,000. Economists had expected building permits to climb to 910,000 from the 899,000 originally reported for the previous month.

After reporting an increase in business activity in late 2012, the manufacturing firms responding to the Philadelphia Federal Reserve's Business Outlook Survey reported moderate declines in business activity in the month of January.

The Philly Fed released a report Thursday showing that its diffusion index of current activity fell to a negative 5.8 in January from a positive 4.6 in December, with a negative reading indicating a contraction in Philadelphia-area manufacturing activity.

The pullback into negative territory came as a surprise to economists, who had expected the index to drop to 6.0 from the 8.1 originally reported for the previous month.

by RTT Staff Writer

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