The European markets finished in the red on Wednesday, following the unexpected decline in U.S. GDP for the fourth quarter. Investors also continued to play it cautious ahead of the announcement from the 2-day FOMC meeting, which is due to be released later today. While few expect any shift in the Fed’s accommodative stance for the time being, investors look to the central bank’s accompanying statement for any signals of possible monetary tightening before the end of 2013.
Economic activity in the U.S. unexpectedly contracted in the final three months of 2012, according to a report released by the Commerce Department on Wednesday, with GDP falling for the first time in over three years.
The report showed that GDP edged down by 0.1 percent in the fourth quarter after surging up by 3.1 percent in the third quarter. The modest drop came as a surprise to economists, who had expected GDP to increase by about 1.0 percent. The decrease also reflected the first drop in GDP since the second quarter of 2009.
Spanish region Catalonia has requested EUR 9.07 billion in bailout money from the country’s regional liquidity fund, the regional government said in a statement on Tuesday. This is on the top of EUR 5 billion sought by the region in August last year. Catalonia is the most indebted of Spain’s 17 autonomous regions.
Catalonia said it intends to use as much as EUR 7.68 billion to meet the debt payments. The remaining amount will be used to help the government attain its deficit targets.
More euro area banks are expected to tighten credit standards for corporates in the first quarter of 2013 than in the previous quarter, the latest bank lending survey by the European Central Bank revealed Wednesday.
The survey revealed that a net 15 percent of banks expect to tighten lending standards for businesses in the coming three months, up from 13 percent in the final quarter of 2012. However, the lenders foresee easing of credit standards for housing loans and consumers this quarter.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.69 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.68 percent.
The DAX of Germany dropped by 0.53 percent and the CAC 40 of France fell by 0.54 percent. The FTSE 100 of the U.K. decreased by 0.30 percent and the SMI of Switzerland finished lower by 0.90 percent.
In Frankfurt, Heidelberg Cement climbed by 1.88 percent. HSBC Holdings has reiterated its “Overweight” rating on the stock.
Deutsche Boerse declined by 1.46 percent, following a broker downgrade.
In Paris, Technip sank by 7.60 percent. The stock was under pressure due to the reduction in guidance by its competitor, Saipem. The profit warning also weighed on shares of Petrofac in the U.K., which dropped by 7.14 percent.
Societe Generale decreased by 1.79 percent. Credit Agricole lost 2.26 percent and BNP Paribas fell by 2.38 percent.
In London, BP Plc gained 0.11 percent. The company said a U.S. District Court has accepted its plea resolving all federal criminal charges against the company stemming from the horrendous 2010 Deepwater Horizon accident in the Gulf of Mexico that claimed eleven lives and led to a massive oil spill.
Imperial Tobacco Group Plc dropped by 3.93 percent, after it issued a profit warning for the first half.
Johnson Matthey sank by 4.24 percent, after reporting a decrease in its third quarter profit.
Antofagasta declined by 8.48 percent. The company warned that the cost of copper production is expected to increase in 2013.
Imagination Technologies Group surged by 12.62 percent, after Morgan Stanley upgraded the stock to “Overweight” from “Equal weight.”
Roche Holding fell by 1.59 percent in Zurich. The drug-maker posted slightly higher full-year IFRS net income of 9.77 billion Swiss francs compared with 9.54 billion Swiss francs a year before.
Eurozone economic sentiment strengthened more-than-expected to a seven-month high in January, suggesting that the region’s economic downturn may have bottomed out, according to the results of a closely watched survey from the European Commission showed on Wednesday.
The economic confidence index climbed to 89.2, the highest since June, from a revised 87.8 in December. The score came in above the consensus forecast of 88.2.
The Spanish economy contracted more than forecast in the fourth quarter as harsh austerity measures aimed at reducing the country’s huge public debt continued to hold back growth.
The gross domestic product contracted 0.7 percent quarter-on-quarter in the fourth quarter of 2012, the latest figures from statistical office Ine showed Wednesday. This was steeper than the 0.3 percent fall in the third quarter and the 0.6 percent contraction expected. The economy slipped into recession in the first quarter of 2012 and the GDP has fallen steadily since then.
Italy’s manufacturing confidence deteriorated from the previous month in January, defying economists’ forecast for an improvement, data released by statistical office Istat showed Wednesday. The manufacturing confidence index dropped to 88.2 in January from 88.9 in December. In November, the figure was 88.4. Economists were looking for a reading of 89.5 for January.
U.K. mortgage approvals for house purchases increased more than expected to 55,785 in December from 54,011 in November, the Bank of England said Wednesday. It was forecast to rise to 54,500.
Total lending to individuals increased GBP 1.7 billion from a month ago, or 0.1 percent. Within total lending, lending secured on dwellings rose GBP 1 billion. On a monthly basis, secured lending climbed 0.1 percent and was up 0.4 percent from a year ago.
Private sector employment in the U.S. increased by more than anticipated in the month of January, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Wednesday.
The report showed that private sector employment increased by 192,000 jobs in January compared to economist estimates for an increase of about 172,000 jobs. However, ADP also said that the job growth in December was downwardly revised to show an increase of 185,000 jobs compared to the addition of 215,000 jobs that was originally reported.
by RTT Staff Writer
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