Europe close: Stocks pick up after Eurozone, US data
European stocks rebounded as investors digested a batch of data in the Eurozone and the US.
On the upside, German unemployment fell 22,000 in October, more than the 4,000 gain predicted by analysts. It followed a 12,000 increase a month earlier. The unemployment rate held at 6.7%, as expected.
Euro-area economic confidence rose unexpectedly in October, another report showed. The sentiment index rose to 100.7 from 99.9 in September, more than the 99.7 predicted by analysts.
On the downside, German inflation in October rose by an estimated 0.7% year-on-year, less than analysts' forecasts for 0.9% on a harmonised basis.
It follows an 0.8% increase a month earlier, adding to concerns about the health of Europe’s biggest economy.
Spanish gross domestic product (GDP) growth slowed down during the third quarter, in line with what the market expected, but analysts raised concerns about how the recovery will fare next year.
Spanish GDP expanded by 0.5% during the July-September period, easing from the 0.6% growth seen in the second quarter.
The European Central Bank (ECB) has been working hard to address a stagnant recovery, including the introduction of this month’s covered bonds and asset backed securities programmes.
“The ECB seems unlikely to announce any new policies this month as it continues to purchase small quantities of covered bonds and prepares to buy asset-backed securities,” according to Capital Economics.
“With the risk of deflation growing, President Mario Draghi may confirm speculation that the ECB is also considering buying corporate bonds. And we suspect that government bond purchases will ultimately be needed to ensure an expansion of the bank’s balance sheet large enough to exert meaningful upward pressure on inflation. But these policies will probably take time to come to fruition given opposition in Germany and elsewhere.”
In the US, GDP rose by 1.3% in the third quarter following a 2.1% increase a quarter earlier. Analysts had predicted a 1.4% gain.
Initial jobless claims in the week to 25 October rose 287,000, compared to 284,000 the prior week and the market estimate for 285,000 claims.
The data follows the Federal Reserve’s decision on Wednesday to keep interest rates unchanged and end its quantitative easing programme.
Fed Chair Janet Yellen on Thursday said that having a range of different ideas and perspectives is crucial to ensuring the US central bank makes correct decisions.
During a speech at a conference on how to attract more minorities and women into the economics profession, she insisted she welcomed the range of contrasting views at the table and hoped to see it replicated “at all levels and throughout the Fed system”.
Bayer, Linde
Bayer AG rallied as the German drug-maker reported third-quarter earnings that topped estimates and raised its forecast for the year.
Linde AG slumped after the industrial-gases company said it will miss full-year and 2016 profit targets.
Renault edged higher as Europe’s third-largest carmaker posted a rise in quarterly earnings.
Barclays advanced after reporting a rise in third quarter pre-tax profit which beat market estimates.
Deutsche Lufthansa dropped after reducing its 2015 profit forecast.
Volkswagen gained as Europe’s largest automaker posted profit that beat analysts' predictions on sales growth at the Audi and Skoda brands.
The euro fell 0.11% to $1.2618.
Brent crude futures declined 0.92% to $86.32 per barrel, according to the ICE.