Thursday, 22 December 2011

European Stocks Higher, Euro Steady


European stocks were higher Wednesday and the euro was steady as markets digested a mixed set of U.S. economic data in subdued trade ahead of the Christmas holiday break.

Dealers said that after a volatile and dramatic year driven by fears the Eurozone debt crisis will tip the world into recession, the tone has turned slightly more positive, driven mainly by recent U.S. figures.

Data Thursday showed another improvement in the U.S. job market as unemployment claims continued to fall but third quarter growth was revised down to 1.8 percent from 2.0 percent.

Dealers said the U.S. economic outlook is overall much better than thought just a few months ago but concerns over Europe weigh, with the European Central Bank's massive liquidity injection Wednesday continuing to get mixed reviews.

In London, the benchmark FTSE 100 index of top companies was up 1.23 percent at around 1500 GMT, helped by an upwards revision to British third quarter growth. Paris and Frankfurt were each up 1.16 percent.

Madrid added 1.03 percent and Milan gained 1.49 percent.

The euro was little changed at $1.3049 from $1.3046 late in New York on Wednesday.

"Markets are a little perkier following a flat to positive session for US markets," said Simon Denham, head of Capital Spreads trading group.

"Buyers seem to be relieved that the selloff in Europe (on Wednesday) did not follow through to U.S. trading."

In New York, the market was firmer in quiet trade. The blue-chip Dow Jones Industrial Average added 0.39 percent and the Nasdaq Composite gained 0.67 percent.

"A generally quiet session with little news flow has been favorable to the bulls who are still waiting for the year-end Santa Claus rally," said analysts at

The fall in U.S. jobless claims to 364,000 last week, much better than forecasts for 380,000, helped sentiment.

"The U.S. has been creating jobs for 14 months in a row and the all-inclusive jobless rate has fallen to 15.6 percent from the 17.4 percent peak," said Jennifer Lee of BMO Capital Markets.

"In other words, the job market is improving."

The third quarter revised growth figures were not "great news," Lee said, adding: "But the details weren't that bad and our view doesn't change with this revision."

Denham at Capital Spreads said the "U.S. economy is growing well and some of the recent economic data has been surprising to the upside."

Asian markets closed lower after the ECB provided cheap three-year loans to 523 banks worth a record 489.2 billion euros ($641 billion), sparking some unease that the lenders needed so much funding.

Others suggested the funds, on offer at just 1.0 percent, were simply too good an opportunity for the banks to pass up as it allows them to cover financing needs going into next year.

Tokyo fell 0.77 percent on Thursday, Hong Kong lost 0.21 percent and Sydney shed 1.18 percent.
by Naharnet Newsdesk