Sun, Aug 11, 2013 - Page 15 News List

European equities advance on better economic numbers

FED MOVE:National benchmark indices rose in 15 Western European markets as the Fed said it remains flexible on the pace of bond buying

Bloomberg

European stocks advanced for a second week, as better-than-expected economic data in Europe and China outweighed concern that the US Federal Reserve would reduce the pace of its bond-purchase program.

The STOXX Eurrope 600 Index rose 0.6 percent to 305.92 this week. The gauge has rallied 11 percent since reaching a low on June 24 as the Fed said it remains flexible on the pace of bond buying, while the European Central Bank and the Bank of England signaled interest rates would remain low for an extended period.

“Things are getting less bad or starting to be a bit better in some cases,” said Karim Bertoni, who helps oversee about US$3.3 billion at De Pury Pictet Turrettini & Co in Geneva. “It is still not euphoria, but it is pointing at the right direction. We are constructive on equities.”

Investors scrutinized remarks this week from Fed officials who indicated willingness to begin tapering the central bank’s bond-buying program if the economic improvement continues. The STOXX 600 plunged 11 percent from May 22 through June 24 amid speculation the Fed would begin reducing bond purchases as soon as next month.

Fed Bank of Atlanta president Dennis Lockhart said in an interview with Market News International this week that if economic growth and job creation pick up as expected, the central bank should proceed with the “removal” of its asset purchases. Fed Bank of Cleveland President Sandra Pianalto said on Wednesday there has been “meaningful improvement” in the labor market and that tapering may be warranted if it continues to strengthen.

National benchmark indices rose in 15 of the 18 Western European markets this week. France’s CAC 40 gained 0.8 percent, while Germany’s DAX slid 0.8 percent.

The UK’s FTSE 100 slipped 1 percent as the Bank of England forecast unemployment would stay above 7 percent at least until the third quarter of 2016. New Bank of England Governor Mark Carney said interest rates would remain at a record low until the jobless rate falls to 7 percent from the current 7.8 percent.

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