UK Chancellor George Osborne again pledged to stick with the government's policy track Tuesday, as new figures showed the economy expanded at the fastest rate since the financial crisis last year but has still not fully recovered from the recession.
Latest gross domestic product figures showed national output expanded 1.9% in 2013, the highest rate since 2007. However, GDP remained 1.3% below the peak in the first quarter of 2008. From peak-to-trough in 2009, the economy shrank 7.2%.
There was also a slight slowdown in the fourth quarter, with GDP up 0.7% compared with 0.8% growth in the third quarter. The growth was driven by the
services sector, which was partly offset by a contraction in the construction sector.
"It is more evidence that our long-term economic plan is working," Osborne said. "But the job is not done, and it is clear that the biggest risk now to the recovery would be abandoning the plan that's delivering jobs and a brighter economic future."
The GDP data helped the London equity markets snap a three-day losing streak Tuesday, with markets up across Europe after the recent losses that were caused by concerns about emerging markets. With the Federal Reserve expected to further reign in its asset buying programme Wednesday, investors are pulling money out of emerging markets and diverting it back to the US.
In India, one of the largest emerging markets, the central bank raised its key interest rates unexpectedly on Tuesday to combat sticky inflation, but sees no further tightening in the near-term if consumer price inflation comes down.
Early indications are pointing to a mixed start on Wall Street Tuesday, as Apple's insipid guidance threatens to weigh on markets there. Apple late Monday reported first quarter earnings that beat analysts' forecasts, but its second-quarter revenue guidance was weak. That has weighed on ARM Holdings' shares Tuesday morning.
In other individual stock news, F&C Asset Management took just a day to reach an agreed takeover deal with Bank of Montreal after revealed the approach Monday. It has agreed a GBP708 million deal, with shareholders getting 120 pence a share in cash plus the 2 pence dividend F&C had already declared.
The deal will double BMO Global Asset Management's assets under management and boost its presence in Europe and the UK. F&C Asset Management had GBP82 billion in assets under management at the end of 2013, it revealed Tuesday.
Shares in Royal Bank of Scotland are up, despite Monday's late warning it has set aside a further GBP3.07 billion to cover past issues, the bulk of which relate to litigation and regulatory decisions regarding mortgage-backed securities and securities sold in the years leading up to the financial crisis of 2008.
Over in Europe, EU finance ministers are discussing Tuesday how to proceed on a controversial scheme to wind down troubled banks in the eurozone, with less than three months left to finalize the much-touted measure. Meant to help shield taxpayers from bank bailouts, the new set-up would be part of a crisis-thwarting banking union - considered key to restoring trust in the eurozone.
EU finance ministers hammered out a compromise on the scheme in December, but an agreement now has to be struck with the European Parliament, which is unhappy about the ministers' approach.
In Ukraine, Prime Minister Mykola Azarov has offered his resignation to end the country's political crisis, just before parliament repealed a series of laws that had led to the current surge in anti-government protests following talks with opposition leaders. Lawmakers voted 361-2 to revoke nine laws that had been criticised as stifling dissent and free speech.
Syrian government and opposition delegations are due to resume direct talks Tuesday, after discussions over an interim administration for the war-torn country stalled. UN and Arab League peace envoy Lakhdar Brahimi has said that the second day of direct talks would again focus on the political framework agreed by talks sponsors the US and Russia.
