The European markets finished in the green Wednesday, after the World Bank raised its growth projections for the global economy. Bank stocks were among the best performers of the session. Investors will be watching for the release of the U.S. Beige Book later today.
The World Bank on Wednesday raised its growth projections for the global economy saying that the easing of fiscal consolidation measures in high-income countries has boosted growth prospects. Releasing the latest Global Economic Prospects report, the lender said it now expects the world economy to grow 3.2 percent this year, stronger than the 3 percent expansion forecast in the June report.
In 2015, the global gross domestic product is expected to grow 3.4 percent, slightly faster than 3.3 percent forecast earlier. The bank projects 3.5 percent expansion in 2016.
Euro area is forecast to grow 1.1 percent this year, ending two years of recession. The 18-nation economy is seen expanding at a pace of 1.4 and 1.5 percent in 2015 and 2016, respectively. In June, the World Bank projected euro area growth at 0.9 percent this year and 1.5 percent in 2015.
France's finance minister has rejected the central bank's proposal to reduce the interest rate on a popular savings account to 1 percent, despite low inflation.
The Bank of France on Wednesday said that the interest rate on the Livret A savings account must be cut to 1 percent from 1.25 percent. The proposal must be approved by the Finance Ministry.
Elsewhere, Finance Minister Pierre Moscovici said the government will not follow the central bank's proposal to reduce the rate, citing concern over the purchasing power of the public, and will leave it unchanged at 1.25 percent. He spoke on the French radio channels Radio Classique and LCI.
The strong rebound in Eurozone's industrial production in November reinforces the view that economic growth picked up in the fourth quarter, IHS Global Insight Chief European and UK Economist Howard Archer said.
IHS Global Insight said that the euro area economy has likely expanded 0.3 percent sequentially in the fourth quarter, after slowing to just 0.1 percent in the September quarter.
Meanwhile, the firm cautioned that conditions remain far from easy for Eurozone manufacturers as fiscal policy remains generally restrictive across the bloc, credit conditions remain tight and unemployment stays elevated.
Chancellor George Osborne said the EU-U.S. free trade agreement should be completed urgently and develop innovative ideas to complete the EU Single Market.
The EU-US free trade agreement would be the world's biggest ever trade deal - together it would account for half of global output, he said in a speech to the Open Europe think tank in London.
It will boost the European economy by EUR 120 billion a year - that is over EUR 500 for every family in the EU. It would bring GBP 10 billion a year to the UK alone.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.46 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 1.03 percent.
The DAX of Germany climbed by 2.03 percent and the CAC 40 of France advanced by 1.35 percent. The FTSE 100 of the U.K. rose by 0.78 percent and the SMI of Switzerland gained 0.46 percent.
In Frankfurt, Lufthansa climbed by 4.42 percent. Citigroup raised its price target on the stock.
HSBC upgraded its rating on E.ON to "Neutral" from "Underweight." The stock climbed by 2.15 percent. RWE also added 2.93 percent.
Commerzbank increased by 2.95 percent and Deutsche Bank gained 3.12 percent.
Credit Suisse upgraded Allianz to ''Outperform'' from ''Neutral.'' The stock rose by 3.17 percent.
QSC declined by 2.39 percent, after JPMorgan downgraded the stock to ''Neutral'' from ''Overweight.''
In Paris, Danone finished up by 0.21 percent. The dairy giant was downgraded to ''Neutral'' from ''Overweight'' at JPMorgan.
Societe Generale increased by 3.63 percent. Credit Agricole and BNP Paribas rose by 3.36 percent and 3.15 percent, respectively.
In London, Burberry surged by 4.63 percent. The luxury group reported a significant increase in third-quarter retail sales.
Anglo American climbed by 5.54 percent. UBS upgraded the stock to ''Buy'' from ''Neutral.''
Unilever declined by 0.29 percent, after JP Morgan downgraded it to "Underweight" from "Neutral."
Centrica fell by 3.52 percent, after Barclays downgraded it to "Underweight" from "Equal weight." SSE was also downgraded to "Underweight" from "Overweight" at Barclays and lost 2.15 percent.
Royal Bank of Scotland increased by 1.46 percent and Barclays added 1.63 percent. Lloyds Banking Group also finished higher by 1.29 percent.
Essenden, an operator of bowling and entertainment centers, reported strong growth in like-for-like sales mainly in its Christmas and New Year period. The stock soared by 23.94 percent.
Hargreaves Lansdown dropped by 4.11 percent, after announcing charges related to Retail Distribution review.
Hennes & Mauritz, which reported higher sales for December, gained 2.71 percent in Stockholm.
Eurozone exports declined for the first time in four months in November, data released by Eurostat showed Wednesday. Shipments dropped by seasonally adjusted 0.2 percent month-on-month, following nil growth in October. At the same time, the decline in imports deepened to 1.3 percent from 1 percent.
On an unadjusted basis, the trade surplus came in at EUR 17.1 billion, compared to EUR 16.8 billion surplus in October. The expected surplus for November was EUR 16.5 billion.
Recession in some European countries together with slow global growth dampened Germany's economic growth in 2013. Despite experiencing a deceleration, the largest euro area economy expanded for the fourth consecutive year.
Gross domestic product grew 0.4 percent in 2013, which was slower than a 0.7 percent rise in 2012 and a 3.3 percent increase in 2011, the latest figures from the Federal Statistical Office showed Wednesday. The full-year estimate was below 0.5 percent forecast by economists.
A leading indicator of the British economy increased for the fifth consecutive month in November, suggesting that the economy will continue expanding in the coming months, data released by the Conference Board revealed Wednesday.
The leading economic index increased 0.5 percent month-on-month to 108.3 in November, after rising 0.4 percent in October and 1.6 percent in September. The index has now recorded positive growth for the fifth consecutive month.
Producer prices rose in line with economist estimates in the month of December, according to a report released by the Labor Department on Wednesday, with higher prices for energy and tobacco products offsetting a drop in food prices.
The Labor Department said its producer price index rose by 0.4 percent in December after edging down by 0.1 percent in November. The increase by the index matched economist estimates.
Business activity for New York manufacturers expanded at a faster pace in the month of January, the Federal Reserve Bank of New York revealed in a report on Wednesday, with the index of regional activity rising much more than anticipated.
The New York Fed said its general business conditions index jumped to 12.5 in January from 2.2 in December, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to climb to 3.5.
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