European Markets Climbed On U.S. Optimism & German Data
(RTTNews.com) - The European markets finished in positive territory Tuesday. Investor optimism over a potential resolution to the budget stalemate in the U.S. was the driving force behind the gains. The stronger than expected German confidence data also added to the positive mood.
The partial shutdown of the U.S. government reached day 15 on Tuesday and the deadline to raise the debt limit is now just two days away. Senate leaders have expressed optimism about reaching an agreement, possibly as early as today. However, House Republicans have crafted a separate bill, which includes a 2-year delay in the medical device tax.
Eurozone finance ministers concluded their meeting in Luxembourg Monday with no specific mention about how to fix the funding gap in Greece's fiscal adjustment program, but promised more meaningful discussion on the topic by the end of the year.
While speaking at a press conference after the meeting, Eurogroup President Jeroen Dijsselbloem declined to comment on the size of the financing gap, saying it is "too early" to give an exact figure as the Troika is yet to complete its review mission.
"The present EU mission has not been finalized," Dijsselbloem was quoted as saying "So for me it's too early to say and I could certainly not pin any number on it."
Ahead of the meeting on Monday, European Central Bank Executive Board member Joerg Asmussen rejected any kind of rolling over of Greek government bonds, saying the ECB is banned from financing governments in such way.
"There is absolutely no way that it can be done in a way of rollover bond or whatsoever which results in monetary financing," Asmussen was quoted as saying in Luxembourg.
Eurozone's industrial sector is unlikely to have provided much of a boost to the wider economy in the third quarter, despite a rise in production in August, Capital Economics European Economist James Howat said Tuesday.
Bank of England's incoming Deputy Governor John Cunliffe reportedly said Monday that he does not see a housing market bubble in the U.K, despite continued rise in property prices. In a testimony to lawmakers at
Parliament's Treasury Committee, Cunliffe said prices are rising from a relatively low base and that the increases are "patchy" across the country.
Bank of England Monetary Policy Committee member Martin Weale on Tuesday said he is concerned about the housing market as home prices were at elevated level.
"People who are taking on mortgage debt do need to be sure that they can afford to look after it, even if interest rates return to normal levels," Weale said in his appearance before the Treasury Committee.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.90 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.85 percent.
The DAX of Germany climbed by 0.92 percent and the CAC 40 of France advanced by 0.78 percent. The FTSE 100 of the U.K. rose by 0.64 percent and the SMI of Switzerland gained 0.70 percent.
In Frankfurt, automakers Daimler and BMW increased by 2.15 percent and 2.88 percent, respectively. European Union environment ministers agreed to German demands to block an agreement to cap car emissions.
Evotec rallied by 3.72 percent. The biotech company said it received revenues of 4 million euros, as its research alliance with Boehringer Ingelheim reached a milestone in September.
In London, Rio Tinto climbed by 4.25 percent, after the mining giant raised its full-year copper forecast.
AstraZeneca fell by 0.11 percent. The drug-maker said its global biologics research and development arm, MedImmune, has acquired privately-held biotech company Spirogen.
Anglo American rose by 2.99 percent. Kumba Iron Ore, the Johannesburg-listed subsidiary of the company, said it has made significant progress on improving its Sishen mine in South Africa.
Burberry dropped by 8.79 percent, after its CEO Angela Ahrendts announced that she will leave to become the senior vice president of retail and online stores at Apple.
Man Group surged by 6.35 percent, after UBS added the stock to its Most Preferred List.
Schroders fell by 0.30 percent, after UBS added it to its Least Preferred List.
WPP rose by 3.14 percent, after it agreed to acquire IM2.0.
Swiss Re advanced by 0.85 percent in Zurich. The reinsurer is reportedly considering selling Aurora National Life Assurance Co. as part of its exit from the U.S. health and life insurance market.
Zurich Insurance climbed by 1.10 percent, after JP Morgan upgraded it to "Neutral" from "Underweight."
Schindler sank by 5.87 percent, after it lowered its full year profit forecast.
Hennes & Mauritz gained 0.66 percent in Stockholm, even as the Swedish apparel retailer reported a 2 percent decline in comparable sales in September.
SKF dropped by 4.82 percent, after its third quarter profit came in weaker than expected.
Stora Enso Oyj rose by 5.01 percent in Helsinki, after Goldman Sachs upgraded it to "Buy" from "Neutral."
Confidence among German investors surged to its highest level in three and a half years in October as the economy began to turn the corner with Europe showing signs of recovery, a survey by the Center For European Economic Research or ZEW revealed Tuesday.
The ZEW indicator of economic sentiment increased to 52.8 in October from 49.6 in September, the Mannheim-based think tank said. The index reading was the highest since April 2010. The indicator has now increased for a third consecutive month. Economists had forecast the reading to remain the same as in September.
Germany's import prices decreased for the eighth successive month in August, and at the fastest pace in nearly four years, latest figures released by the Federal Statistical Office showed Tuesday.
The import price index dropped 3.4 percent on an annual basis in August, after falling 2.6 percent in July. Prices have now decreased for the eighth straight month, and the latest fall was the biggest since November 2009. Economists were looking for a faster decline of 3.9 percent for August.
The statistical office further noted that Germany's export prices declined at a faster annual rate of 1 percent in August than 0.8 percent in July.
France's inflation, as measured by the harmonized index of consumer prices or HICP, remained steady at 1 percent in September, data from statistical office Insee revealed Tuesday. The consumer price index increased 0.9 percent year-on-year in September, at the same pace as in August. Both the figures matched economists' forecast.
U.K. consumer price inflation remained unchanged in September, in contrast to expectations for a decline, as falling petrol prices were offset by airfare hikes. However, a slowdown in the factory gate measure preserve hopes that inflation will come down in months ahead.
Headline inflation held steady at 2.7 percent in September, data released by the Office for National Statistics showed Tuesday. Inflation continues to remain above the Bank of England's 2 percent target and expectations were for a marginal drop to 2.6 percent.
The U.K.'s factory gate inflation eased for a second consecutive month in September, the latest figures from the Office for National Statistics showed Tuesday.
The output price index for goods produced by manufacturers, also known as factory gate prices, rose 1.2 percent year-on-year in September compared with a rise of 1.7 percent in the year to August. Economists had forecast a 1.3 percent increase in prices.
Residential property prices in the U.K. increased at the fastest pace in nearly three years in August, and the index value surpassed the previous peak seen in January 2008. The rate of growth also exceeded economists' forecast.
Data released by the Office for National Statistics on Tuesday showed that the house price index increased 3.8 percent in August from a year earlier, after rising 3.3 percent in July. Economists had forecast a 3.4 percent gain for August.
Business conditions for New York manufacturers were little changed in the month of October, according to a report released by the Federal Reserve Bank of New York on Tuesday. The report showed that the general business conditions index fell to 1.5 in October from 6.3 in September. A positive reading indicates an increase in regional manufacturing activity, although economists had expected the index to climb to 7.0.
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