European Markets Finished Higher Despite Slow Start

VIENNA (Alliance News) - The European markets got off to a weak start ...

Alliance News 12 January, 2017 | 1:12AM
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VIENNA (Alliance News) - The European markets got off to a weak start Wednesday, but staged a recovery in the morning that brought them back near the flat line.

The markets then fluctuated between small gains and losses before firmly entering positive territory in the afternoon. The positive opening on Wall Street helped to push the European markets into the green.

Eurozone economic growth momentum is likely to be sustained in the first half of this year, driven by steady growth in private consumption and public spending, the group of three leading European economic institutes said Wednesday.

Gross domestic product appear to have increased by 0.4% in the fourth quarter of 2016 and is expected to keep growing at the same pace over the first half of this year, the group consisting of the Germany's Ifo, France's INSEE and Italy's ISTAT said in a statement.

Inflation was forecast to increase to 1.5% in the first and second quarters of this year from 0.7% in the final three months of 2016. Energy prices are expected to drive overall price growth. Core inflation was expected to keep growing at a similar pace over the forecast horizon at about 0.9% year-on-year.

The World Bank lowered its global growth projections as rising trade protection could have adverse effects after the US President elect Donald Trump takes office this month.

According to the Global Economic Prospects report of the World Bank, the global economy will grow 2.7% this year instead of 2.8% projected in June last year. Going forward, growth was expected to be 2.9% each in 2018 and 2019.

Growth in the 19-nation euro area was expected to slow to 1.5% this year, before slowing slightly to 1.4% next year.

Uncertainty about the 'Brexit' process is expected to weigh on growth in the UK during 2017-18, the Washington-based lender said. However, the bank observed that the EU referendum had limited short-term cross-border financial market spillovers.

The pan-European Stoxx Europe 600 index advanced 0.29%. The Euro Stoxx 50 index of eurozone bluechip stocks increased 0.03%, while the Stoxx Europe 50 index, which includes some major UK companies, added 0.29%.

The DAX of Germany climbed 0.54% and the CAC 40 of France rose 0.01%. The FTSE 100 of the UK gained 0.23%, but the SMI of Switzerland finished lower by 0.26%.

In Frankfurt, Volkswagen climbed 3.24% after the automaker confirmed it is closing in on a deal to settle a US probe into the rigging of diesel-powered cars to cheat emissions tests.

Utility RWE jumped 3.34% and rival E.ON gained 5.09%. ThyssenKrupp advanced 3.27% and Salzgitter added 3.43%.

In Paris, Engie weakened by 2.98% after the French state revealed that it has sold a 4.1% stake in the company.

In London, supermarket giant J Sainsbury rose 1% after posting better-than-expected sales for the third quarter.

Engineering firm Cobham plunged 14.46% after its group trading profit for the year ended December 31 fell short of guidance.

Homebuilder Taylor Wimpey declined 1.22% despite saying it expects to deliver full year profitability at the upper end of market consensus.

Tullow Oil fell 1.86% after issuing a trading update for 2016.

TUI dropped 4.47% after Credit Suisse downgraded its rating on the stock to "Underperform" from "Outperform."

UK industrial production recovered at a faster than expected pace in November, data the Office for National Statistics revealed Wednesday. Industrial output climbed 2.1% in November from October, when production eased 1.1%. Output was expected to rise 1%.

The UK visible trade deficit widened more-than-expected in November, the Office for National Statistics reported Wednesday. The trade in goods showed a deficit of GBP 12.2 billion versus a shortfall of GBP 9.9 billion in October. Economists had expected the deficit to rise to GBP 11.5 billion.

UK construction output dropped unexpectedly in November, figures from the Office for National Statistics revealed Wednesday.

Construction output fell 0.2% in November from October largely due to a contraction in non-housing repair and maintenance. The monthly decline was followed by a 0.6% decrease in October and confounded the expected growth of 0.2%.

Copyright RTT News/dpa-AFX

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