(RTTNews.com) - The European markets finished solidly in positive territory on Thursday, after the Federal Reserve tapered its massive bond-buying program by $10 billion to $75 billion per month. The Fed cited recent improvement in the U.S. jobs market when it announced the decision late Wednesday. Banks were among the top performing stocks on Thursday.
Beginning in January, the Fed will buy mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month.
Policy makers want to see sustained jobs creation and an uptick in the rate of inflation before further scaling back their unprecedented support measures. They say any additional reduction in the size of QE3 will be contingent on economic data.
European Union finance ministers on Wednesday struck a deal on a much-awaited scheme to handle bank failures in the region, ahead of EU leaders' summit in Brussels on Thursday.
The ministers agreed to set up a EUR 55 billion-single resolution fund over the next 10 years, financed by bank levies raised at national level. The fund will be backed by a new agency which will decide how to shut down a troubled lender.
The ministers agreed to establish a single resolution board, which, upon notification by the European Central Bank that a bank is failing or likely to fail, would adopt a scheme placing the bank into resolution.
The forward guidance of the Bank of England has not become less relevant in the face of falling unemployment, Monetary Policy Committee member Ian McCafferty said in an interview with the Northern Echo.
"In a period of early recovery, forward guidance has a great deal of merit in helping to sustain and build confidence," McCafferty said.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.67 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 1.64 percent.
The DAX of Germany climbed by 1.68 percent and the CAC 40 of France advanced by 1.64 percent. The FTSE 100 of the U.K. rose by 1.43 percent and the SMI of Switzerland gained 1.87 percent.
In Frankfurt, Deutsche Bank increased by 1.45 percent, while Commerzbank added 1.57 percent.
Bayer has agreed to buy Algeta, a Norwegian developer of novel targeted therapies for cancer patients, for about $2.9 billion. Bayer climbed by 1.11 percent while Algeta gained 1.41 percent in Oslo.
In Paris, Credit Agricole advanced by 1.85 percent. Societe Generale and BNP Paribas rose by 1.49 percent and 1.00 percent, respectively.
LVMH increased by 0.62 percent. Berenberg upgraded the stock to ''Buy'' from ''Hold.''
In London, AstraZeneca climbed by 1.10 percent. U.S.-based Bristol-Myers Squibb has agreed to sell its global diabetes business to AstraZeneca for a consideration worth up to $4.1 billion.
Royal Bank of Scotland advanced by 1.75 percent. Barclays climbed by 2.14 percent and Lloyds Banking Group added 1.93 percent.
Skyepharma finished higher by 5.83 percent. The oral and inhalation drug delivery company said it is eligible for royalties of up to 9 million pounds per annum following approval of Anoro Ellipta in the U.S. for treating chronic obstructive pulmonary disease.
Saab surged by 31.88 percent in Stockholm, after receiving a $4.5 billion contract from Brazil.
The Eurozone current account surplus increased to seasonally adjusted EUR 21.8 billion in October from EUR 14.9 billion in September, the European Central Bank said Thursday.
German real earnings declined in the third quarter from last year, figures published by the Federal Statistical Office showed Thursday. Earnings fell 0.3 percent on average in the third quarter from the same period last year. In nominal terms, however, earnings rose 1.3 percent.
Separately, the statistical agency reported that Germany's public debt, including extra budgets, declined 1.9 percent year-on-year in the third quarter. Compared with the second quarter, debt fell 1.2 percent.
British retail sales recovered in November, helped by strong demand for clothing and footwear during the winter season, the latest figures published by the Office for National Statistics showed Thursday. Sales volume including auto fuel rose 0.3 percent month-on-month in November, recovering from a revised 0.9 percent fall in October. The outcome was in line with expectations.
Following the substantial increase seen in the previous week, first-time claims for U.S. unemployment benefits unexpectedly saw some further upside in the week ended December 14th.
The Labor Department released a report on Thursday showing that initial jobless claims climbed to 379,000, an increase of 10,000 from the previous week's figure of 369,000. The revised figures showed an increase of 64,000 in the previous week.
The modest increase came as a surprise to economists, who had expected jobless claims to drop to 337,000 from the 368,000 originally reported for the previous week.
Existing home sales in the U.S. fell by more than expected in the month of November, according to a report released by the National Association of Realtors on Thursday.
NAR said existing home sales dropped 4.3 percent to a seasonally adjusted annual rate of 4.90 million in November from 5.12 million in October. Economists had expected existing home sales to dip to an annual rate of 5.02 million.
While the Federal Reserve Bank of Philadelphia released a report on Thursday showing that regional manufacturing activity grew at a slightly faster rate in December, the index of activity in the sector rose by much less than expected.
The Philly Fed said its diffusion index of current activity edged up to 7.0 in December from 6.5 in November, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to climb to 10.0.
Suggesting gradually strengthening economic conditions, the Conference Board released a report on Thursday showing that its index of leading U.S. economic indicators rose by slightly more than expected in the month of November.
The Conference Board said its leading economic index rose by 0.8 percent in November after edging up by 0.1 percent in October and jumping by 1.0 percent in September. Economists had been expecting the index to increase by 0.7 percent.
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