European Markets Finished Mixed Despite Commodities Rebound

(RTTNews) - The European markets ended Thursday's session with mixed results. A rebound in commodity prices provided a boost to the markets. Mining and energy stocks were among the best performers. However, mixed corporate earnings results and an EC growth downgrade limited today's gains.

The European Commission on Thursday marginally downgraded its euro area growth and inflation projections as risks from the slowdown in China and other emerging markets, falling oil prices and the weak global trade escalate.

Nonetheless, the single currency bloc entered its fourth year of recovery and moderate growth is forecast to continue, driven by consumption.

In the Winter 2016 Forecast, the EU projected 1.7 percent growth for the euro area this year, a notch lower than the 1.8 percent estimated previously. However, the figure was better than the 1.6 percent growth estimated for 2015. The projection for 2017 was maintained at 1.9 percent.

Eurozone inflation is being kept low by global forces such as falling oil prices, but this does not mean the bank should just wait-and-watch, as acting late poses the risk of eroding expectations and allow disinflation to continue, European Central Bank President Mario Draghi warned on Thursday.

"Adopting a wait-and-see attitude and extending the policy horizon brings with it risks: namely a lasting de-anchoring of expectations leading to persistently weaker inflation," Draghi said in a lecture delivered at a conference in the Bundesbank.

"And if that were to happen, we would need a much more accommodative monetary policy to reverse it."

"Seen from that perspective, the risks of acting too late outweigh the risks of acting too early," the central bank chief said.

Bank of England policymakers unanimously decided to keep the interest rates unchanged for the first time in seven months, as Ian McCafferty abandoned his call for a hike, and also signaled that record low rates are unlikely to rise in the foreseeable future.

The U.K. central bank also downgraded its growth projections in the wake of subdued global activity and continuing fiscal consolidation.

The Monetary Policy Committee, headed by Mark Carney, voted 9-0 to hold the interest rate at 0.50 percent, the Bank of England said in a statement on Thursday.

The rate has been held at this record-low level since 2009. McCafferty dropped his call for a quarter point rate hike for the first time since July.

The Euro Stoxx 50 index of eurozone bluechip stocks increased 0.30 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.35 percent.

The DAX of Germany dropped 0.44 percent and the CAC 40 of France rose 0.04 percent. The FTSE of the U.K. gained 1.06 percent, but the SMI of Switzerland finished lower by 1.48 percent.

In Frankfurt, Munich Re increased 3.08 percent. The reinsurer raised its dividend for 2015 after reporting slightly better-than-expected full-year results.

Daimler surrendered 3.53 percent. The car and truck maker reported record profits for last year but forecast slower growth in 2016.

RWE climbed 3.34 percent and peer E.ON added 2.49 percent.

Deutsche Bank advanced 3.02 percent and Commerzbank finished higher by 3.11 percent.

In Paris, LafargeHolcim dropped 2.48 percent. Cement giant said it is considering divestment of its interest in Lafarge India with an annual cement capacity of around 11 million tons.

Total gained 2.12 percent, after signing a binding agreement with ENN LNG Trading for the delivery of 0.5 million tons per year of liquefied natural gas for a period of 10 years. Technip also closed higher by 5.02 percent.

Renault declined 3.30 percent and Peugeot dropped 2.31 percent. Car parts maker Valeo also fell 3.54 percent.

In London, Royal Dutch Shell climbed 6.08 percent even as it reported an 80 percent decline in profit last year amid the global oil price slump.

Vodafone slipped 1.24 percent despite reporting its sixth consecutive quarter of growth in revenues.

AstraZeneca fell 6.10 percent after saying it expects lower revenues and earnings this year.

Mining stocks surged after a rebound in commodity prices. Anglo American soared 19.95 percent and Antofagasta jumped 14.56 percent. Glencore leaped 15.97 percent and Rio Tinto surged 10.27 percent. BHP Billiton climbed 10.79 percent and Fresnillo gained 8.59 percent.

Credit Suisse sank 10.89 percent in Zurich. The banking group firm slipped into a loss in the fourth quarter, weighed down by impairment charges and restructuring costs.

Banking firm ING Group surged 8.88 percent in Amsterdam after posting better-than-expected fourth-quarter results.

Statoil jumped 8.52 percent in Oslo, after the oil firm announced plans to cut spending after reporting a huge annual loss for 2015.

Germany's construction sector expanded at the fastest pace nearly five years in January, driven by the sharp growth in residential building activity, survey figures from Markit Economics showed Thursday. The seasonally adjusted Purchasing Managers' Index, or PMI, climbed to 57.9 in January from 55.5 in December.

Germany's real earnings increased at the fastest pace since records began in 2008, data from Destatis showed Thursday. The index of real earnings increased 2.5 percent in 2015 from last year, the fastest since the beginning of the time series in 2008. Earnings had gained 1.7 percent in 2014.

In addition to the moderate 0.3 percent rise in consumer prices, the real growth was also due to the increase in nominal earnings of 2.8 percent, which was slightly above average compared with the previous five years, Destatis said.

U.K. house price growth increased unexpectedly in January, data published by Lloyds Banking Group's Halifax division showed Thursday.

House prices advanced 9.7 percent year-on-year in three months to January, following a 9.5 percent increase in the preceding three months. Prices were expected to rise 9 percent.

Ahead of Friday's release of the monthly jobs report, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits rose by more than expected in the week ended January 30th.

The report said initial jobless claims climbed to 285,000, an increase of 8,000 from the previous week's revised level of 277,000. Economist had expected jobless claims to inch up to 280,000 from the 278,000 originally reported for the previous week.

Labor productivity in the U.S. fell by more than anticipated in the fourth quarter, according to a report released by the Labor Department on Thursday. The report said labor productivity dropped by 3.0 percent in the fourth quarter after climbing by 2.1 percent in the third quarter. Economists had expected productivity to decline by 1.8 percent.

Meanwhile, the Labor Department also said unit labor costs jumped by 4.5 percent in the fourth quarter following a 1.9 percent increase in the third quarter. Costs had been expected to rise by 4.4 percent.

Largely reflecting a steep drop in durable goods orders, the Commerce Department released a report on Thursday showing a notable decrease in new orders for U.S. manufactured goods in the month of December.

The Commerce Department said factory orders tumbled by 2.9 percent in December after falling by 0.7 percent in November. Economists had expected orders to slump by 2.8 percent.