By Dow Jones Business News, September 19, 2013, 12:09:00 PM EDT
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Germany's DAX 30 benchmark closed at a record and a broad Europe benchmark ended at the
highest level in more than five years Thursday as investors got their first chance to react to the Federal Reserve's
surprise decision to leave bond purchases unchanged.
"The market is taking the view that ongoing liquidity pumped into the system is a good thing for the financial
systems," said Will James, manager of the Standard Life Investments European Equity Income Fund.
"But I'd be surprised if we continue to see those gains. I think there's got to be a degree of reflection about what
this really means...It's because the Fed doesn't think the economy is strong enough," he added.
The Stoxx Europe 600 index gained 0.6% to close at 315.05, while Germany's DAX 30 index added 0.7% to 8,694.18,
marking a record close.
The U.K.'sFTSE 100 index added 1% to 6,625.39 and France's CAC 40 index climbed 0.9% to 4,206.04.
U.S. stocks traded mostly lower after closing at record highs on Wednesday.
The solid gains in Europe came after the U.S. Fed late Wednesday decided against reducing its $85-billion-a-month
asset purchases and said it would wait for more evidence of economic progress. The central bank cited rising mortgage
rates and reduced federal spending as headwinds that "could slow the pace of improvement in the economy." European
markets were closed when the Fed made its announcement, but most had expected a cut of about $10 billion a month in the
Fed Chairman Ben Bernanke said that the central bank might still scale back its bond buys before the end of the year,
but that it will depend on whether growth and the pace of hiring show greater strength.
The decision against a September taper also boosted gold and silver prices, triggering a rally for Europe's precious
miners. Polymetal International PLC surged 7.9%, Randgold Resources Ltd. jumped 8.1% and Fresnillo PLC gained 6.1%.
"A number of stocks that either have a commodity, an emerging markets or a growth angle to them are bouncing today.
They have been under pressure lately on worries about [Fed] tapering and the impact it would have on those end markets,"
James from Standard Life said.
Other than the mining firms, he also mentioned Nestle SA , up 1.2%, and Unilever PLC ( UL ), up 3.3%, as companies with
notable exposure to emerging markets.
Banks also gained, with Intesa Sanpaolo SpA up 3.7% in Milan, Standard Chartered PLC climbing 3.3% in London and
Deutsche Bank AG ( DB ) ticking 1.5% higher in Frankfurt.
Among other notable movers in Europe on Thursday, shares of Roche Holding AG gained 0.8%. A report in Dealreporter
said the Swiss drug maker was eyeing a takeover of U.S.-listed BioMarin Pharmaceutical Inc. ( BMRN ). A representative
from Roche declined to comment on the report, while BioMarin wasn't immediately available for comments.
Also in Zurich, shares of Cie. Financière Richemont SA rose 2.1% and Swatch Group AG picked up 1.7% after data
showed Swiss watch exports rose 0.5% in August.
Shares of Scania AB climbed 2.8% after the Swedish truck maker said it didn't see the normal seasonal downturn in
European order bookings in July and August.
Shares of Airbus-parent European Aeronautic Defence & Space Co. added 1.7% in Paris after Deutsche Lufthansa AG said
it will order 59 long-range jetliners from Airbus and Boeing Co. (BA). Lufthansa shares were down 0.4%.
The broader markets shook off downbeat retail data from the U.K., showing sales dropped 0.9% in August after a solid
1.1% rise in July.
Meanwhile, a monthly survey from the Confederation of British Industry showed U.K. manufacturers are the most upbeat
in 18 years.
The data calendar was heavy in the U.S.. Some 309,000 Americans filed for jobless claims last week, which beat
analysts expectations. The Philadelphia Fed's manufacturing index jumped to a reading of 22.3 in September from 9.3 in
August, while the leading economic index for the U.S. rose 0.7% in August to 96.6.
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