The European markets ended Thursday's trading session with mixed results. The recent gains in Europe were largely halted by some weaker than expected economic data released by the United States in the afternoon. Investors were disappointed by the larger than expected increase in weekly jobless claims, the drop in housing starts and the weak Philly Fed data.
The International Monetary Fund on Wednesday approved a three-year loan worth EUR 1 billion to Cyprus as part of the EUR 10 billion international bailout package aimed at stabilizing the country's ailing banking sector.
The approval of the latest loan tranche allows immediate disbursement of EUR 86 million to the euro member.
While applauding Cyprus' efforts to address the crisis, IMF Managing Director Christine Lagarde said that the country faced "significant" challenges, including restoring credibility in the banking sector and reducing fiscal deficits and debt to sustainable levels.
The continuing recession and the recent relapse in business confidence suggest that the Eurozone economy is in serious danger of suffering further modest contraction in the second quarter, IHS Global Insight Chief European and UK Economist Howard Archer said.
The firm expects the Eurozone economy to contract 0.7 percent this year, with very gradual recovery only starting in the latter months of the year.
The ongoing recession is likely to reinforce pressure on the European Central Bank to introduce further measures to try to support economic growth, and there is possibility of an interest rate cut to 0.25 percent in the near term.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.10 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.22 percent.
The DAX of Germany climbed by 0.09 percent, but the CAC 40 of France fell by 0.08 percent. The FTSE 100 of the U.K. dropped by 0.09 percent and the SMI of Switzerland decreased by 0.68 percent.
In Frankfurt, Commerzbank and Deutsche Bank declined by 3.66 percent and 0.63 percent, respectively.
Allianz rose by 0.34 percent, despite a downgrade by S&P Equity.
ThyssenKrupp climbed by 1.92 percent. Societe Generale upgraded the stock to ''Buy'' from ''Hold.''
In Paris, EDF declined by 5.24 percent, followed by Alstom, which fell by 2.86 percent. Merrill Lynch downgraded EDF to ''Underperform'' from ''Neutral.''
Vivendi fell by 2.67 percent, as its unit Activision Blizzard is said to be shelving a plan to repurchase shares held by the French media giant.
In London, Aviva surged by 7.24 percent. The insurer said pro forma value of life new business, a key measure of growth, increased 18 percent in its first quarter, driven mainly by solid growth in developed markets of UK and France.
Thomas Cook leaped by 13.41 percent. The tour operator said first-half loss attributable to equity holders of the parent narrowed. The firm also announced a 1.6 billion pounds capital refinancing plan.
Vedanta Resources rose by 1.52 percent, after reporting annual results.
Deutsche Bank downgraded HSBC to ''Hold'' from ''Buy.'' The stock finished down by 0.72 percent.
Antofagasta rose by 0.24 percent. The copper miner reported a 29.3 percent decline in earnings before interest, tax, depreciation and amortization for its first quarter, reflecting lower revenues and higher operating costs.
Zurich Insurance declined by 3.33 percent in Zurich, after the insurer reported a lower profit for the first quarter.
Richemont surged by 7.57 percent, after the luxury goods group reported higher annual profit.
Eurozone exports grew for the third consecutive month in March giving a ray of hope that the region can emerge out of the recession that has now extended to a record six quarters.
Exports increased at a pace of 2.8 percent in March from the previous month, when it grew only 0.2 percent, data published by Eurostat showed Thursday.
Meanwhile, reflecting the weak domestic demand, imports fell 1 percent after easing 2.2 percent.
A faster growth in exports accompanied by a fall in imports doubled the trade surplus in March. The trade surplus totaled EUR 22.9 billion, up from EUR 10.1 billion in February.
Eurozone inflation slowed as initially estimated to 1.2 percent in April from 1.7 percent in March, final data from Eurostat showed Thursday. Month-on-month, prices were down 0.1 percent.
With energy prices showing a substantial decrease, the Labor Department released a report on Thursday showing that U.S. consumer prices fell by slightly more than expected in the month of April.
The Labor Department said its consumer price index fell by 0.4 percent in April following a 0.2 percent drop in March. Economists had expected prices to decrease by about 0.3 percent.
While the Commerce Department released a report on Thursday showing that U.S. housing starts fell by much more than anticipated in the month of April, the report also showed a substantial increase in building permits.
The Commerce Department said housing starts tumbled 16.5 percent to a seasonally adjusted annual rate of 853,000 in April from the revised March estimate of 1.021 million.
Economists had expected housing starts to drop to an annual rate of 969,000 from the 1.036 million originally reported for the previous month.
On the other hand, the Commerce Department said building permits, an indicator of future housing demand, jumped 14.3 percent to an annual rate of 1.017 million in April from the revised March rate of 890,000.
Following a recent downward trend, first-time claims for U.S. unemployment benefits rebounded by much more than anticipated in the week ended May 11th, according to a report released by the Labor Department on Thursday.
The report said initial jobless claims rose to 360,000, an increase of 32,000 from the previous week's revised figure of 328,000. Economists had expected claims to climb to 330,000 from the 323,000 originally reported for the previous week.
Manufacturing firms responding to the Federal Reserve Bank of Philadelphia's monthly Business Outlook Survey unexpectedly indicated that regional manufacturing activity has contracted in the month of May.
A report released by the Philly Fed on Thursday showed that its diffusion index of current activity fell to a negative 5.2 in May from a positive 1.3 in April, with a negative reading indicating a contraction in regional manufacturing activity.
The decrease by the Philly Fed index came as a surprise to economists, who had expected the index to climb to a positive reading of 2.2.
For comments and feedback: editorial@rttnews.com