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European Markets Pared Gains Due To Uncertain Italian Election Result

The European markets ended Monday's session in the green. The markets had been higher in early trade, after reports that early exit polls from the Italian elections showed the center-left, led by Pier Luigi Bersani, was in the lead. Those early gains eroded later in the session, after updated results showed renewed strength for Silvio Berlusconi. The result of the election remains uncertain, as votes continue to be counted.

The U.K. lost its prized AAA bond ratings for the first time since 1978 in the face of sluggish economic growth that is raising challenges to fiscal consolidation.

Moody's Investors Service downgraded the nation's sovereign rating by one notch to Aa1 late Friday, while assigning 'stable' outlook. In a related action, the rating agency also lowered the ratings of the Bank of England to Aa1 from Aaa.

The latest action was taken after a warning last February, and adds more pressure on Chancellor George Osborne to contain the huge public debt. He is set to present the budget on March 20.

French and German finance ministers have urged the Troika and Cyprus to expedite the talks on a bailout deal for the troubled euro area nation.

In a joint statement released on Monday, French Finance Minister Pierre Moscovici and his German counterpart Wolfgang Schaeuble welcomed the result of the Cypriot election. They expressed hope that the new government would 'quickly continue' with the bailout negotiations.

The French government should honor its commitment to reduce the country's structural deficit this year, and take steps to minimize any overshoot of its budget deficit target, European Central Bank (ECB) executive council member Benoit Coeure said Monday.

In an interview to a French newspaper, he urged the French authorities to take appropriate measures to convince its peers in the region that they are committed to keeping to the European Union's deficit regulations.

France needs an extra EUR 6 billion next year to make up for a shortfall in government finances as the temporary tax hikes will end this year, Budget Minister Jerome Cahuzac said in a radio interview on Monday.

The current budgetary situation of the country does not allow the government to ignore such a shortfall in revenue, the minister said told Europe 1 radio. To ensure fiscal stability, it is essential to find new revenue, he added.

The Greek economy will likely remain in recession this year and unemployment will continue to rise before fiscal conditions start improving next year, and the government should takes steps to expedite structural reforms to combat recession, Bank of Greece Chief George Provopoulos said Monday.

Addressing the bank's shareholders meeting, Provopoulos cautioned that though the eventuality of Greece exiting the Eurozone has been reduced significantly, and confidence is gradually being restored there is no room for complacency.

The central bank forecasts that the economy would shrink by 4.5 percent this year, which is slightly more than the 4.4 percent contraction the European Commission has predicted.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.86 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.12 percent.

The DAX of Germany climbed by 1.45 percent and the CAC 40 of France advanced by 0.41 percent. The FTSE 100 of the U.K. rose by 1.16 percent and the SMI of Switzerland gained 0.53 percent.

In Frankfurt, K+S gained 2.78 percent. Citigroup upgraded the stock to ''Buy'' from ''Neutral.''

Commerzbank rose by 2.27 percent and Deutsche Bank added 2.11 percent.

Merck gained 0.76 percent. The drug-maker said the Phase III CENTRICa trial of the investigational integrin inhibitor cilengitide did not meet its primary endpoint.

Deutsche Boerse surged by 5.58 percent, after stating that it is not involved in merger talks with CME Group.

In Paris, Vivendi increased by 3.01 percent. UBS upgraded the stock to ''Neutral'' from ''Sell.''

Credit Agricole advanced by 2.76 percent. Societe Generale and BNP Paribas gained 0.22 percent and 0.25 percent respectively.

HSBC downgraded Alcatel-Lucent to ''Underweight'' from ''Neutral.'' The stock finished lower by 1.16 percent.

In London, miners turned in a positive performance. Antofagasta climbed by 3.04 percent and Anglo American gained 2.03 percent. BHP Billiton increased by 1.41 percent and Rio Tinto added 1.54 percent.

Royal Bank of Scotland and Barclays rose 2.84 percent and 1.64 percent, respectively.

Publisher Pearson reported a sharp decline in 2012 profit on higher costs and in the absence of a year-ago gain on asset sale. The stock dropped by 3.70 percent. Reed Elsevier fell by 1.42 percent.

Reckitt Benckiser decreased by 2.99 percent. Amneal Pharmaceuticals LLC received U.S. FDA approval for generic versions of Reckitt Benckiser's Suboxone sublingual tablets for maintenance treatment of opioid drug dependence.

U.K. mortgage approvals declined unexpectedly to 32,288 in January from 33,440 in the prior month, the British Bankers' Association said Monday. It was forecast to rise to 34,000.

Spain's producer price inflation weakened for the fifth successive month in January, and hit the lowest level in thirty-four months, data released by statistical office INE showed Monday.

The producer price index increased 2.6 percent on an annual basis in January, slower than the 3.3 percent gain seen in December, and the rate of growth hit the lowest level since March 2010. It decelerated for the fifth month in a row.

Italy's merchandise trade with countries outside the European Union (EU) resulted in a deficit in January compared to a surplus in the previous month, preliminary data released by statistical office Istat showed Monday.

The trade balance was a deficit of EUR2.28 billion in January, compared the EUR3.32 billion surplus recorded in December.

China's manufacturing sector growth slowed unexpectedly in February due to a fall in foreign orders and slower expansion of output, dampening hopes of economic rebound at the start of the year, survey results from Markit Economics showed Monday.

The HSBC flash Manufacturing Purchasing Managers' Index dropped to 50.4, a 4-month low, from 52.3 in January, confounding expectations for a rise in reading to 52.3 in February.

by RTTNews Staff Writer

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