(RTTNews.com) - The majority of the European markets ended Thursday's session in the red. The weaker than expected Eurozone industrial production data put a halt to the gains the markets have enjoyed over the past few sessions. Gains earlier in the trading week were sparked by the decreased likelihood for U.S. military strikes on Syria, after the country agreed to a Russian proposal to surrender its chemical weapons.
Bank of England Governor Mark Carney on Thursday defended the introduction of forward guidance and reaffirmed that tightening will not be considered as long as the economy cannot withstand it.
The forward guidance implies that the central bank will not hike interest rate at least until the unemployment rate has fallen to a threshold of 7 percent. The bank forecast unemployment not to fall to 7 percent until 2016.
But markets are betting rate hikes sooner than what the BoE estimates due to the recent improvement in the economy and unemployment data. Official data released Wednesday showed that the jobless rate dropped to 7.7 percent in three months to July, the lowest since September to November 2012.
The U.K. unemployment rate is unlikely to decline sharply with the recent strong economic recovery, Bank of England policymaker David Miles said Wednesday.
"People may interpret that good news as implying that we might reach the 7% threshold level relatively quickly," he said. "I rather doubt it myself."
The decline in UK's unemployment rate, as latest data showed, is consistent with signs of economic recovery, Capital Economics UK Economist Martin Beck said.
However, though the jobs market appears to be fully sharing in the economy's momentum, it is likely to take a long time for the jobless rate to fall to the Bank of England (BoE)'s threshold of 7 percent, at which the bank will consider the case for tightening monetary policy, the firm said.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.09 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.12 percent.
The CAC 40 of France fell by 0.30 percent and the SMI of Switzerland dropped by 0.22 percent. The DAX of Germany decreased by 0.02 percent, but the FTSE 100 of the U.K. gained 0.01 percent.
In Frankfurt, RWE rose by 3.53 percent. A report emerged that the utility's chief executive may suggest lower annual dividend compared to last year. Citigroup downgraded the stock to ''Sell'' from ''Neutral.''
In Paris, EDF dropped by 2.63 percent. The company's second-largest shareholder Norges Bank reportedly sold 13 million shares.
Schneider Electric finished up by 0.43 percent. Citigroup upgraded the stock to ''Neutral'' from ''Sell.''
Vivendi advanced by 2.66 percent, after reports that it is considering splitting into two separate companies.
Sanofi decreased by 2.64 percent, after it withdrew its application for U.S. approval of lixisenatide.
In London, Melrose Industries fell by 1.82 percent. The stock was downgraded to ''Neutral'' from ''Buy'' at Citigroup.
Aggreko declined by 2.48 percent, after Deutsche Bank lowered its price target on the stock.
Dialight plunged by 16.36 percent. The company said delay in contract awards for Obstruction Systems business is likely to negatively impact its expectations for 2013.
Kentz sank by 9.19 percent, after Amec withdrew from making a formal takeover offer. Amec finished with a gain of 1.89 percent.
Home Retail, which reported second-quarter sales, increased by 5.37 percent.
Wm. Morrison Supermarkets reported lower first-half profit, but said it expects an improvement in second-half sales performance. The stock climbed by 1.78 percent.
Next, which reported first-half results, finished higher by 0.29 percent.
Richemont, which issued sales data, dropped by 2.30 percent in Zurich.
ASML advanced by 4.85 percent in Amsterdam, after a positive broker recommendation at Goldman Sachs.
Industrial production in the euro area fell more-than-expected in July amid widespread weakness in activity, raising fears that the recovery in the second quarter, which marked the end of a protracted recession, may not be sustained in the coming quarter.
Industrial output fell 1.5 percent in July from a month ago, marking a sharp deterioration from June's revised 0.6 percent growth, a report released by statistical office Eurostat showed Thursday. Economists had forecast a more modest decline of 0.3 percent, following June's originally recorded 0.7 percent gain.
German wholesale prices decreased the most in nearly four years in August after holding steady in July, data from the Federal Statistical Office revealed Thursday. The selling prices in wholesale trade fell 1.7 percent year-on-year in August, marking the biggest drop since November 2009. Prices recorded no change in July, but showed a 0.7 percent annual increase in June.
French EU harmonized inflation slowed in August to 1 percent from 1.2 percent in July, the statistical office Insee showed Thursday. The rate came in line with economists' expectations. On a monthly basis, the harmonized index of consumer prices was up 0.5 percent in August, also matched economists' forecast.
Italy's industrial production contracted in July for the twenty-third successive month, and at a notably faster rate than in the previous month, data released by statistical office Istat showed Thursday. Industrial production fell a working-day adjusted 4.3 percent on an annual basis in July, faster than the 2.1 percent decline seen in June. Production has now recorded negative growth for nearly one year. Economists had forecast a 2.7 percent fall for July.
Unemployment in Greece continued to increase with the jobless rate reaching a new record-high in June, data from the Hellenic Statistical Authority showed Thursday. The seasonally adjusted unemployment rate advanced to 27.9 percent in June from 27.6 in May and 27.1 percent in April.
While the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits unexpectedly dropped to a seven-year low in the week ended September 7th, the decrease was largely due to technical issues in two states.
The Labor Department said initial jobless claims dropped to 292,000, a decrease of 31,000 from the previous week's unrevised figure of 323,000. The notable decrease came as a surprise to economists, who had been expecting jobless claims to climb to 330,000.
With higher fuel prices offset by declining non-fuel prices, the Labor Department released a report on Thursday showing that U.S. import prices unexpectedly came in flat in August.
The report said import prices were unchanged in August after ticking up by 0.1 percent in July. Economists had been expecting import prices to rise by about 0.5 percent.
Meanwhile, the Labor Department said export prices fell by 0.5 percent in August following a 0.1 percent decrease in the previous month. Export prices had been expected to edge up by 0.1 percent.
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